At the beginning of 2018 I wrote extensively on what was likely to happen under the administration of Jerome Powell, the new Federal Reserve Chairman. In my article ‘New Fed Chairman Will Trigger A Historic Stock Market Crash In 2018‘, published in February, I predicted that the Fed would continue interest rate increases and balance sheet cuts throughout the year and they would knowingly initiate a crash in equities.
To be clear, this was not a very popular sentiment at the time, just as it wasn’t popular when I predicted in 2015 that the Fed would launch interest rate hikes instead of going to negative rates in order to start a catalyst for economic crisis. The problem some people have with this concept is that they just can’t fathom that the central bank would deliberately crash the system. They desperately cling to the notion that the Fed and other central banks want to keep the machine rolling forward at any cost. This is simply not true.
The claim is that the banking elites are “required” to keep the system propped up in a state of reanimation because they are reliant on the system to provide capital and thus “influence.” The people that assert this argument don’t seem to understand how central banks operate.
As most liberty activists should know by now, central banks are essentially a legally protected counterfeiting scheme. Using fractional reserve banking at a ratio that is secret, central banks create their own capital from thin air, and they can infuse capital into international banks at will when it suits their purposes. There is no “profit motive” for the banking syndicate. They can print the cash or digitally conjure it anytime they wish, and they can use it to purchase tangible assets before their printing diminishes the buying power of the currency, passing price inflation on to regular citizens.
Thus, keeping the system in perpetual positive motion is not necessary in terms of the transfer of wealth from the population to the banking class. In fact, economic crisis events are very useful to the elites because these events allow the banks to buy up concrete assets like natural resources, businesses and properties for pennies on the dollar.
For example, this is exactly what they did during the Great Depression when major banks like JP Morgan bought out thousands of failing local banks across the U.S. and took control of mortgages and other assets being paid off by a vast portion of the American citizenry. The banking system never looked the same again, and international banks continue to dominate ever since as localized competition remains elusive.
This also occurred after the crash of 2008 when companies like Blackstone bought up billions in distressed mortgages for well below previous market value, taking control of the property market and turning bankruptcies into rentals.
The 2008 crash was an asset buying bonanza for banks and corporation bailed out by the Federal Reserve. Low interest rates provided endless cheap credit through which companies could buy anything and everything. Of course, they mostly bought their own equities through stock buybacks, artificially inflating the stock market to the point of absurdity while taking on historic levels of debt — but we’ll get to that in just a moment.
The point is, there is every reason for central banks and their international corporate banking partners in crime to want a controlled demolition of the economic system. As long as they always control the dominant currency mechanism and the means of wealth distribution, they can use fiscal disasters to buy up hard assets for almost nothing.
The profit motive argument against deliberately triggered market declines has no legs when we consider this reality. But there is another reason far beyond the issue of asset accumulation; namely the psychological effects these events have on the masses.
Economic panic is a very useful tool in the hands of the banking establishment for molding social conditions in a way that gives them greater psychological power over the public. In every instance of financial catastrophe it is the banker cabal that is asked to step in and save the day. In 2008 it was the Federal Reserve that was tapped to act as a hero to the mainstream, and only through the tireless efforts of alternative economists and liberty activists has this fallacy been exposed to some in the population.
In the next crisis, it will be the IMF that is used as the front organization for the next rescue as market collapse leads into a crisis in confidence in the U.S. dollar. I outlined the plan for this in my recent article ‘IMF Reveals That Cryptocurrency Is The New World Order End Game.’
The average person is completely unaware of the Hegelian con-game being played here. And, when banking institutions step in as the designated “caregivers” to the ailing economy, what we sometimes see is a kind of reverse “Florence Nightingale effect”, in which the patients fall in love with the nurse merely because they have associated the extension of economic function to an extension of their lives (or at least, an extension of comfort in their lives).
The next engineered crash is shaping up to become the most epic in history, and make no mistake, it has already started.
Even now mindless optimism and blind faith in the markets continues, and the assumption on the part of the investment world is that the banks will eventually be forced to admit their “policy error” on tightening and that they will revert back to lower rates or even more QE. This is not going to happen.
An example of the Fed reversal fantasy was the reaction to Jerome Powell’s recent speech in light of “criticism” by the Trump Administration. Powell’s statement included a throwaway line indicating that the Fed rate was “just below” the neutral rate, which investors and algo trading computers immediately interpreted as a “dovish” pull back from a previous statement in which Powell said they were a “long way” from the neutral rate. Stocks spiked on the “shift” in speech patterns.
Yes, investment markets really are that desperate for a sign that the Fed will keep the party going. But let’s look at reality.
Powell is simply repeating a fact, not changing Fed policy on rate hikes – the Fed funds rate is 2.19% technically just below what the Fed considers the “neutral rate” of inflation; around 2.5% to 3%. The assumption markets are making is that the Fed will not hike BEYOND the neutral rate of inflation. This is a naive assumption. At no point did Powell indicate the Fed would stop rate hikes. In fact, Powell dared to reiterate his assertions that the US economy is healthy and well into “recovery”. This is not the statement of an institution that is about to stray from its current path.
I would also point out that all this focus on interest rates might be a distraction from the Fed balance sheet cuts. I cannot recall if Trump ever complained about this issue, but asset cuts are a primary key to the decline in stock markets, perhaps more so than interest rates.
Hopium sellers have been peddling several scenarios lately in which the current downtrend in markets will stop and the bull rally party rekindled. The three most pervasive are…
Scenario #1: The Fed suddenly skips rate hikes in the near term under pressure from markets and the White House.
Scenario #2: The Fed fully admits to policy error in light of stock market declines and re-launches QE.
Scenario #3: Trump announces successful trade war negotiations, primarily with China, and ends tariff measures.
As I have noted many times in the past year, Jerome Powell admitted in the minutes of the October 2012 Fed meeting that tightening measures in the face of extreme market addiction to stimulus would inevitably cause a crisis event. The Fed had created a monster of a bubble, and a monster in the investment world, and they knew they were doing it. With corporate and consumer debt levels at historic highs, any interest rate increases, no matter how seemingly marginal, will kill stock buybacks, cause corporate cutbacks and derail consumer spending.
Fed asset cuts will also offset stock buybacks over time and drag markets lower. If the suspicions of alternative economists are correct, then the Fed has been holding a massive short volatility position for years. Powell seems to confirm this kind of market manipulation in his statements in the Fed minutes of October 2012. If they continue to unwind this position as they dump their balance sheet, stocks will crash regardless of interest rates.
Today, Jerome Powell is taking the exact actions in policy that he originally admitted would cause a crash. Powell is not tightening out of stupidity, nor is he tightening out of a misguided error in policy. Powell is tightening because the banking elites WANT a crash. Period.
Because of this, it is highly unlikely that the Fed will stop tightening measures, let alone reverse them. The Fed does not care about “pressure” from markets, or pressure from the White House which I believe is part of a farcical Kabuki theater. The Fed will continue hiking up to the neutral rate of inflation, and probably well beyond that into 2019. This is exactly what they did during the Great Depression to escalate the crisis, and it is exactly what they will do today.
Trump’s trade war rhetoric and false media headlines are now the only levers that can be pulled to stall the market landslide. But it appears that this stalling is meant to make the crash more palatable, not stop it from happening. With Trump’s cabinet loaded with globalists, it is foolish to believe the current trend will end any other way.
Trump will jawbone markets up at times, but overall there will be no progression in negotiations. The latest Powell statement is most likely designed to help mitigate the downturn that will occur when the Trump Administration announces “no progress” with China after the impending G20 conference. The trade war will eventually escalate to include threats to U.S. bond markets and the dollar itself.
Trump’s policies match almost exactly with the model followed by Herbert Hoover preceding the crash of 1929 and the Great Depression. His trade war is a perfect distraction for the masses as central banks, the real culprits behind the crisis, pull the plug on life support for the economy. We will at times hear rumors of new ground gained with China and other nations, and these rumors will continue to be dispelled days later as they have been for the past year.
The battle between Trump and the Fed is purely a soap opera designed to lure conservatives into the Neo-con fold as they are told that Trump is a mere victim of Federal Reserve’s interest rate hikes. The rest of the world is being told that Trump is a gigantic baby, throwing a tantrum over a collapsing stock market bubble that he originally took credit for. They will be told that it is Trump’s tariffs and populism that are destabilizing the economy, not the Fed’s tightening into economic weakness.
The truth is, BOTH Trump and the Fed are working in tandem while playing a game of pretend-fighting that Trump knows well from his days in the WWE (World Wrestling Entertainment) and reality TV.
The establishment wants the system to break down, but at a speed that is manageable for them and psychologically disarming for us.
The optimistic claim that what we are seeing in equities is nothing more than a “correction” is a fallacy that misrepresents the reality of conditions on the ground. It is based on assumptions that the Fed will stop tightening measures and that the trade war will end abruptly and favorably. It is also based on severe cognitive dissonance — the optimism of drug addicts, their veins filled with years of QE heroin. The truth is that the drug binge is over.
The banking elites are done with that phase of the collapse, and they are moving onto the next phase. It is clear in their actions, it is clear in their public admissions, and it is clear in the downward spiral of the economy at large. What we are seeing is not a “correction,” it’s a crash. It is time for people to accept this fact and prepare accordingly if they have not already.
This article was originally published at Alt-Market.com.
I’m not a financial market expert, by any means, but this is exactly what I imagined would happen.
Same here, all here know what’s coming. I talked with my dad and friends for years now and told them that regardless of whether Trump is in on it or not, after he was elected the elites have to wait at least a couple years to pull the rug out from under Trump and the economy, only to not have the blame fall onto obama and democrat/progressive/socialists policies, but to squarely point the finger at Trump, conservative policies, and us deplorable’s, laying the claim that sufficient time has now passed that nothing but Trump could be responsible. It’s a lie, but it gives further credence to their previous lies that obama is the one who gave us this stock market and economic rally and that it is the result of all of his fine 8 years of hard work undoing what the previous republican administration under George Bush goofed up. The crash event is “Inevitable” but it is being orchestrated by the PTB to not only give them more time to increase their profits (grip) when they pull the trigger, but to also blame and attempt to once and for all stamp out conservatism and the constitution. It’s a mega/endgame-conspiracy. The talking heads will be on top of every mountain around the world blaming Trump and the constitution, we will never hear the end of it. There will be no rational debate, only shouting down and screaming, and all while the world burns. And if it doesn’t happen in these next two years it will be for sure after Trump is re-elected, if they can wait that long, to further galvanize their claims against us. I hope I’m wrong.
There’s a broken link in this posting…
‘IMF Reveals That Cryptocurrency Is The New World Order End Game.’
The author stated that “In the next crisis, it will be the IMF that is used as the front organization for the next rescue as market collapse leads into a crisis in confidence in the U.S. dollar.” This is confirmed by economist Jim Rickards, in his book, “The Road to Ruin.” Rickards states: ” A global financial crisis, worse than any before, is imminent…A liquidity injection of the kind seen in 1998 and 2008 will not suffice because central bank balance sheets are stretched.” He goes on to say that depositor accounts will be frozen to “buy time, while global elites convene an international monetary conference. They will attempt to use special drawing rights (SDR’s) issued by the IMF to refloat the system. SDR’s might work. But a more likely outcome is that citizens will see through the sham of resolving a paper money crisis with more paper money. Investors will grow impatient…they will want their money back. The money riots will begin.” (p.53)
The economy goes up and down. The stock market goes up and down. In other words there are cycles just like real life.
The recession of 2008 was so serious for individuals and the economy the government had no real tools but to lower interest rates to prevent a more serious crash. This happened globally and many countries went to negative interest rates. We did not. I also know there are people who say let the economy crash because that will get rid of a lot of the debt. These people don’t even contemplate the suffering which would result or simply dismiss it. These people are misguided.
So the economy responded as expected and turned around which is all very normal as far as I am concerned and has done very well since then and resulted in a 10 year bull market. But there are signs (lagging indicators which show increasing inflation at both the wholesale and retail level) and it’s necessary to increase interest rates to slow these down. This is a high-wire act because the economy is so huge.
If we go into the next recession with very low interest rates already the government will lack the one tool necessary to prevent a crash. To lower them. But you can’t lower them when they are already low.
I do not subscribe to the conspiracy theories in the above article. I do believe the authorities are acting in goodwill and doing the best they can. If that makes me a Pollyanna so be it. But I’ve watched it for a long time and the brightest minds on wall street have made money and lost money and have yet to find the elixir for perfection in investing. So too with the Federal Reserve. The economy is not just the 800 pound gorilla in the room. It is the 10,000 pound gorilla in the room. Give the Fed a break.
Give the Fed a break? Seriously? I know a troll when I see one, albeit well spoken.
Thank you for this very reasonable and rational comment. There’s a lot of tinfoil being worn around here.
I agree with LadyWest. I’ve been a Survivalblog reader and supporter from the beginning. While I think doomsday scenarios and history lessons are important, if you’re “prepared” (in every sense), the market ups and downs, interest rates bouncing around, etc., won’t matter. The larger problems are the addiction to debt, living beyond one’s means, not working at self-sufficiency, etc. “Investing” in anything other than tangibles, is risky business IMHO.
I am with you, Old Lady. We can rail against the villains when we (some of us) are guilty of some of the same things. Who among us has not lusted for “more”? Seems to me Jesus addressed this when he spoke of the “log in our own eye”. An imprecise paraphrase which I hope some of you get.
Carry on.
Ladywest- the Fed do not deserve a break as you say, they are a corrupt, thieving set of liars, are you a Pollyanna ? it’s naive to think the Fed care about you or me, if they had a shred of human kindness and compassion there would be a public admission of the fiat money laundering system, guess what ? there is no admission or ever will be, why do you see these people who run a empire of extreme wealth and giving to their mates as having the common persons well being at heart ?, too many Christians also support DJT because he has a circle of Christian ” advisors ” around him, I am not saying you either agree with that or not, but looking at the Presidents entourage exposes a lot of NWO sycophants and greedy yes men ( and women ) who pretend on being highly subject to God ( to which ” God ” they never say openly ), it always pay’s dividends to watch closely what those in leadership both do and say, so very few mean what they say and say what they mean.
Peace
AS
The FED is doing exactly what it should have done years ago. Artificially low rates do more harm than good, as they discourage saving and encourages reckless borrowing. If you can’t afford a new home at 5% or 6%, then you can’t afford a new home! If you can’t put 25% down, then you can’t afford a new home. Loan officers and bankers will have a different story as that is how they pay their bills.
Inflation is here, most obvious in stock, bond, and real estate prices. The tell is the rotation of assets! There is not enough liquidity to support listed evaluations, which forces constant rotation of limited investment funds.
It is not a conspiracy theory, it is debt and excess spending at every level. Nor is there any chance it will resolve itself. You will not get elected telling people to grow up and take responsibility for themselves.
Nor will it take a major shock to bring the house down. A minor slowdown could do it when we start with empty pockets and few options.
LADYWEST, Oldlady, and any others sympathetic to the FED- The FED has been systematically inflating our money for 105 years. They have been bleeding the U.S. dry. They have milked out 96 or 97 percent of the dollar’s value, for their own benefit, and need to set up a new system so they can keep fleecing us out of our wealth. Give them a break? They need a break- as in BREAKUP. This article is correct- they are raising interest rates even though they know that it will cause a crash, because they think that by doing so, they can keep control of the financial system. Interest rates of around 4.5 or 5% or SLIGHTLY higher will make the U.S. national debt explode, and they know it.
What THEY do not realize is that a crash will hurt them more than anyone else because because they have the most to lose. In a big enough crash- and this one will be the biggest lollapaloozah of all time- everybody loses everything, except those with ONLY tangible assets. They the banksters, and most people, have mostly or only paper assets. In other words, they only have a bunch of IOUs. Which will be WORTHLESS.
In my opinion, President Trump knows that a reset is inevitable, and he will have to supervise it. I believe that he is doing what he can to soften the impact of the impending crash, and will supervise the reset to another system, without the FED. GIVE THE FED A BREAK ? THAT IS NUTS !
I understand the sentiments but was only trying to express how hard it is to keep an economy the size of ours on an even keel. Fiat money? Sure. But what else are you going to use for a medium of exchange? We’re past the stones and trinket stage.
I believe Old Lady said it best. Debt is the biggest problem and I am guilty too and am working on getting it down while increasing my preparedness. Were it not for this site I would not be heading in the right direction. I’ve learned so much here and know I will continue to do so.
The FED and Central Bankers have nothing to lose! If our currency goes belly up, it will just be replaced with another. In the meantime people will sell whatever they have to meet their daily needs.
The FED and Central Bankers cannot lose. They will end up with most of the real assets and a new currency. Even if they lose a few trillion they hold on the books – it did not cost them anything.
Ladywest
– A brief comment, friends of mine who live in NZ tell me many, many dozens of the elites on wall street ( including Fed people at the top ) have multi million dollor estates in NZ, exclusive bolt holes where the riff raff such as ( maybe you ) and me and certainly the rest of us as not allowed, they expect to escape the wrath of the proles, they have armed guards with all the stuff ( machine guns are legal in NZ along with suppressors etc ) obvious choice, rather ironic in a way, the downside ( for them ) is the locals are just as well armed and don’t appreciate interlopers…….what’s my point ? those slime balls at the top KNOW a crash is coming. I have no sympathy for them, they do conspire to escape, they do conspire to also be at the top again in a new order. I think those who use greed and avarice for personal gain at the expense of honest hard working people are utterly worthless. May they burn in hell for creating the fiat money…….
Peace- And yes I am finally out of debt myself.
Auditing the Fed would be the best way to determine what their actions really are and, likely, what their intents are as well. But this is one thing that they will not allow, nor will our “representatives” push for it. That alone is the biggest argument in favor of the conspiracy theorists in my book. If the Fed is only looking out for the rest of us, they could easily prove it. But they won’t. And because they are a private institution FOIA has no control and we have no way to know what they are really doing.
“Managing” the economy is a weird concept in the first place. There really isn’t such an entity as the “economy” but by positing it and structuring policy such that someone CAN manipulate it, it does lay an effective groundwork for exactly the kind of thing that the author suggests. And his numbers are real. Inflation (still not sure why the Fed even considers it desirable for us, since all that does is decrease our wealth as individuals) has sucked most of the value out of our currency over the years.
I do not care who is in office at what ever position there is because the average Amerikan will loose it all over time as long as the federal reserve system FRS exists in any form. The only way I know to keep wealth is to keep it hidden from the prying eyes of the system. If you have land and i do and suggest everyone have farm-able or garden-able land to wit then the government can confiscate it through edicts and taxes. Precious metals are about the only way to keep purchasing power out side of the watered down united states dollar. I would love to build a home on the land i allegedly own but the thieving government known a communists will steal from me again through property taxes due to the increase in value.
AS I write this Dave Hodges of THE COMMON SENSE SHOW just spoke of the Canadian government making it illegal to ship precious metals through their mail system. HUMMMMMMMMMMMMMM shades of things to come!
As a lonnnnnnnnnnnnnnnnnnnnnnnnnnnng time reader of this site It is clear to me what is coming.
GET YOUR MONEY OUT OF THE SYSTEM NOW……………..BETTER U GET HALF YOUR IRA IN YOUR HAND THEN TO HAVE 100 PERCENT OF NOTHING LATTER DESTROYED BY INFLATION OF THE FIAT CURRENCY.
DID you read that a hidden 21 trillion spending spree off books in addition to the official 21 trillion Debt is happening and has been?
I fear for the unprepared and am highly concerned for the prepared.
I am on the lower end of the eco scale with not much to steal cept my shovels, rakes, rototiller and other junk for gardening but when it all goes belly up
I SHALL EAT………………….WILL YOU?
For anyone not familiar with how our money is created and used by the federal reserve banking system(lady West?),may I suggest reading “The Creature from Jekyll island” by G.Edward Griffin.After reading ,a session at the range may be necessary to calm yourself.
The theorists may be right. Since I’m out of debt since 2013 (living simply, cutting back, relying on friends rather than a car) I have little worry of many of the warnings.
Now, the bank account being frozen stuff…that has my attention. Then I remember that I have been stretching my generosity muscles lately. Sending money to organizations (like the one helping victims of the Camp Fire) with trust they will use it well.
I am no saint and struggle to give that money away. At the same time “those to whom much has been given, much is expected”. Another tortured paraphrase of scripture, please forgive me.
Here is the link I used: Can you make a tax-deductible donation now to the North Valley Community Foundation to help victims of the horrific Camp Fire? 100% of your donation will go to the foundation’s emergency response and long-term recovery efforts.
You may fuss that the donation site is affiliated with Move-On.org. Okay, find your own way to help those folks. I will not be bound by my political opinions when what seems like a genuine opportunity to be of aid is offered.
Carry on.