Well…she did it. After eleven years of maintaining emergency rates in order to boost asset prices, valuations, speculative debt accumulation back to pre-financial crisis levels, Janet Yellen officially hiked rates this past week.

More interesting was that while banks are getting paid more on excessive reserves, and hiked the lending rates, they have not offered to share any of their new found income with savers. Of course, that revelation should not really surprise anyone at this point.

However, as I discussed earlier this week, there is a nagging question as to why they would raise interest rates at this late juncture in the economic cycle.

“With economic growth currently running at THE LOWEST average growth rate in American history, the time frame between the first rate and next recession will not be long.

However, as I have stated many times in the past, it is quite likely the Fed is already well aware that we are very late in the current economic cycle. For them, the worst of all possible outcomes is being caught at the“zero bound” of interest rates when the next recession begins which removes one of the more effective policy tools at their disposal.

For investors, there is little “reward” in the current environment for taking on excess exposure to risk assets. The deteriorating junk bond market, declining profitability and weak economic underpinnings suggest that the clock has already begun ticking. The only question is how much time is left.

This week’s reading list is a compilation of opinions on the Federal Reserve’s latest actions and the myriad of potential outcomes that are expected. How you choose will be very important, so choose wisely.

1) Yellen, You’re Nuts by Karl Denninger via Market Ticker

“The effective fed-funds rate has been running at 0.15% for a bit now. To ‘raise rates’ to 0.25% the net change in system liquidity required is about 60%.

This is math folks. It’s the reason The Fed has a monstrous balance sheet; they had to in order to influence rates the way they wanted to on the way down. But to reverse that policy you must unwind that which you did in exactly the same sort of fashion.

So how much does The Fed have to drain themselves? I don’t know and neither do they. But that they have to reduce the amount of the ‘overfill’ in the liquidity pool by some 60% isn’t conjecture, it’s arithmetic.

We’ll see if the EFF actually moves in coming days as they “desire” and where the drain comes from. But this much is certain: If the rate does move, the drain will have occurred somewhere.”