Here we go again; Janet Yellen was on Capitol Hill testifying about the banking system

Forget about all her comments about how solvent the banking industry is - of course it's not

The banking system is more vulnerable and more highly leveraged than before the bailout

I am focusing on what she did or did not say about the Fed's intentions to raise rates in December and how the markets reacted

Headlines following the testimony were about the probability that the Fed will raise rates in December

The December meeting will be a live meeting with a rate hike on the table

The official probability of a December rate hike rose from 50% to 60%

When the Fed did not raise rates in October they removed language referencing concerns about international markets

This was interpreted as a more hawkish stance on the part of the Fed

The global economy was used as an excuse, but the Fed had no intention of raising rates in October

In December when it doesn't raise rates, it'll use another excuse

The markets wants to believe that the Fed will rates, and as soon as Yellen's comments were released, the dollar soared and gold tanked

Let's look at what Janet Yellen actually said: first I am going to go to a Reuters story, Fed's Yellen sees possible December rate rise

That's all it takes, just the mention of a possibility makes everybody jump to the conclusion it is going to happen

Here's Yellen's quote directly from the artice:

"What the committee has been expecting is that the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2 percent target over the medium term,"

"If the incoming information supports that expectation then our statement indicates that December would be a live possibility."

She is saying, if we get the improved data we're expecting

The labor market has been weakening and the last two jobs numbers have been quite weak

Yellen says it is possible if we get improvements we expect we will raise rates

Anything is possible... it is more probable that she is not going to raise rates in December

She actually says it's a long shot

She's been saying this all year and it has not meant anything

Reuters omitted from the article that Yellen followed up the above statement by reiterating that at this point, the Fed still has not made up its mind

Another story from CNBC:Janet Yellen: December rate hike a 'live possibility'

Here's a Yellen quote from this article:

"Now no decision has been made on that and, what it will depend on, is the [Federal Open Market Committee's] assessment at the time. That assessment will be informed by all of the data that we collect between now and then,"

This implies that they intend to collect data from now until the December meeting and make their decision on that data

If the Fed does not know now, how different can the data be?

If nothing is going to change, why not make a decision?

Yellen's monetary policy is to pretend to raise rates and then not do it

If you actually listen to what she is saying, it is far more probable that she won't raise rates, because thus far, we have not seen an improvement in the data she is tracking

Even if the Fed sees improvements, they still might not raise rates

Here's the one thing that Yellen is not doing: she does nothing to alter the false perception that a rate hike is likely

This shows me that it is by design. They are tightening by rhetoric

Here's an illustration of how an interest rate hike would be disastrous

Freddie Mac issued its first quarterly loss ($475 million) in 4 years

This is significant because Freddie Mac's profits have been reducing the deficit

They have been making risky sub prime loans that produce short term profits, but we know how this is going to end

This quarter's loss presents the government with a bill - a bailout

They are losing money with interest rates still at zero