by Brandon Smith
This past week’s events have sent the economic world into a tailspin. Mainstream analysts were so sure of themselves heading into the July Federal Reserve meeting – The Fed was going to cut rates by a respectable margin, or they were going to cut incrementally and promise the markets through thinly veiled language that QE4 was well on the way. This was supposed to be a certainty.
They did not get what they were hoping for, but I don’t think many people understand why the Fed did what they did.
I have long held that the Fed has no intention of kicking the can on the economic crash that is currently underway, and that the Fed’s tightening cycle was a way to restrict liquidity into economic weakness in order to trigger the collapse of the “Everything Bubble”. I predicted over the past two years that the Fed would keep liquidity conditions tight until right before or right after an accelerated crash in fundamentals and markets. The crash in fundamentals has already begun in 2018 and 2019. A return to incremental crash conditions in stock markets has also now likely started.
While I believed the central bank would hold rates steady in July, Jerome Powell’s public statements after the Fed announcement of a minor .25 bps rate cut were even worse for market investors to hear and only support my original position. Powell’s assertion that the cut was merely a mid-year “adjustment” and not the beginning of an easing cycle horrified the investment world. Powell was telling markets quite bluntly that the punch bowl was not coming back anytime soon. On top of this, St. Louis Fed president James Bullard refused to commit to any further interest rate adjustments this year, citing a “wait and see” approach, which could take many months. Once again, Fed officials are making it clear that expectations for a stimulus bonanza are naive.
The consensus seems to be that the Fed has offered “too little too late”, and I would say that this is a completely deliberate action. Frankly, there was nothing holding the Fed back from a cut of .50 bps and lavishing the financial media with images of QE heaven. Trump says he wants it, the daytrading world is begging for it, and central bankers rarely shy away from more money printing. Unless, of course, the banking elites WANT a crash to happen in the near term, that is.
The Fed has basically admitted to America that yes, we are entering recession territory and that the recovery they have been promoting for the past several years is a fraud. At the same time, they told investors that they aren’t going to do jack about it.
The Fed followed its rate adjustment “disappointment” with a large dump of assets from its balance sheet – around $36 billion total in July. With no certainty of new stimulus in the near term, and no certainty of further rate cuts this year, stocks were pummeled, and this is a downtrend that is probably going to continue for the rest of the year (with pauses and dead cat bounces mixed in). Of course, the banking elites have a plan and they intend populists to help them, wittingly or unwittingly.
Cue Donald Trump: Like clockwork, the Trump Administration jumped into the fray the VERY NEXT DAY to distract the media and everyone else from the Fed’s actions by initiating even more surprise tariffs on China. China has now responded with a complete freeze on imports of US agricultural products. In return the US Treasury labeled China a currency manipulator. China is now threatening to devalue the Yuan, which will shake global equities and forex markets to the core. Keep in mind that all of this has happened in less than a week.
Suddenly, the blame for the latest stock plunge is being attributed to Trump rather than the Fed. How convenient for the central bankers…
Four thoughts on the latest developments:
Trump Bringing Down Stocks On Purpose To Beat The Fed Into Submission? This Is Crazytown Talk…
First, I have noticed a narrative going around that Trump has expanded the trade war in a game of chicken with the Fed. His intention? To drive stock markets down in order to force the Fed to cut rates and launch new QE measures. I’m sorry, but this theory makes little sense.
Everyone used to say that Trump was putting pressure on the Chinese in order to reduce the trade deficit and create more fair conditions for US goods overseas, as well as to stop technology theft. But since the trade deficit has only expanded since the trade war began, now they are saying that Trump is using the trade war as leverage against the Fed? Well, which one is it? If the Fed were to accommodate Trump with QE4, would he then end the trade war without accomplishing his stated goals? If the answer is “no”, then why would the Fed accommodate him at all?
Trump has fused the success of his administration to the success of the stock market. He has been so insistent on taking credit for every stock market rally that now there is no separating the two. I have been warning about this for well over a year; Trump has made himself the perfect scapegoat for a collapse of the Everything Bubble should the globalists and their international banking partners decide to start one.
If the battle between Trump and the Fed was actually legitimate rather than staged, then why would Trump want a crash in stock markets? Going into an election year, a crash in stocks would hurt him far more than it would hurt the central bank. The Fed would only need to wait a year for Trump to be buried in the 2020 election after the economic calamity is wrapped around his neck. The same goes for the Chinese. They would only have to wait a year as well for Trump to be unseated. The only incentive for Trump to cause a market panic is if he is intentionally creating a diversion for the central bankers. Trump’s cabinet, flush with banking elites and CFR members, is proof enough that this is a distinct possibility, except for the people who make the insane argument that Trump is “keeping his enemies close”.
Those that do not accept the reality the Trump is a pied piper are desperately trying to conjure some kind of logical rational for Trump’s actions as well as the Fed’s actions. They won’t find anything logical until they recognize that the Fed is deliberately triggering a crash and that Trump and conservatives (or populists) are meant to take the fall for it.
The Fed And The Elites Are Against The Trade War?
Second, Jerome Powell has insinuated in his recent statements that the ONLY reason the Fed was considering the bare bones rate cut in July was because of Trump’s trade war and the instability it might cause. Here we see the globalist narrative of the “evil populists” being built into the minds of the public. The assertion? That the crash in fundamentals is due to the trade war and the trade war alone. And, the trade war is a product of nationalism and populism, thus, all populists are culpable for the crash. The central banks that created the massive financial bubble? They get a pass.
Beyond this, there are also some rather ridiculous mainstream reports of members of Trump’s cabinet, including Mnuchin and Ross, advising him against the latest tariffs on China. Really? The same banking elites and CFR members that were all for the trade war six months ago are now against it? Again, this only makes sense if you look at it from the perspective that Trump and conservatives are supposed to take the blame for the crash while the bankers escape any scrutiny. They “tried to warn Trump” after all, but he wouldn’t listen. He “went rogue”. This is absurd theater designed for gullible people.
Trump doesn’t do anything without the approval of the elites in his cabinet. There is no internal battle. Everything Trump does is for the benefit of the role he is playing within the globalist script.
Trump Is Secretly Trying To Bring Down The US Economy To Defeat The Globalists In A Game Of 666D Chess?
This theory stems from a subset of people within the liberty movement that would give anything to believe that a hero on a white horse is coming to fight their battles against the globalists for them; but it’s simply not reality. Also, again, it makes no sense.
If Trump had detached his administration completely from the economic bubble from the very beginning and said “Hey, I don’t take credit for the stock market boom because it’s a fraud created by the Fed”, only then would the above theory have any potential. If Trump said to the Fed and to the American people, “I will try to MAGA whether the Fed raises rates or cuts rates, and when the economy inevitably crashes the American people should blame the central bank”, then perhaps we might consider him a heroic statesman. This is not the case.
Also, only people who do not understand how the globalist cabal functions believe that the Fed and other US based structures are at the top of the pyramid of control. The globalists are GLOBAL, the Fed is nothing more than a franchise and the dollar nothing more than a sacrificial mechanism that can be replaced. They have done it in the past and they can do it again. In fact, that is a plan they openly admit to.
As it stands, there will be unimaginable consequences for a crash within the US financial system, and many people will aim their hatred at Trump and conservatives for these developments. But by that time I expect that Trump will be long gone. Far from being a moment of triumph, it will be a moment that the global elites hope will bury sovereignty ideals for generations.
Bringing down the US economy will do nothing to stop the globalist plan for “new world order” centralization and a single cashless global currency system. The truth is, the collapse of the US economy is a necessary part of the economic reset that the globalists desire.
It’s Not Over Yet – The Next Stage Is A No Deal Brexit
As I predicted in March of this year, a No Deal Brexit event is the most likely outcome as it most serves the interests of globalists in pinning a crash in the US and parts of Europe on populists and sovereignty activists. With the exit of Theresa May and the rise of Boris Johnson, a ‘no deal’ panic is all but assured.
The EU banking system is on the verge of a Lehman moment. Deutsche Bank is in shambles. Italy’s banks are ticking time bombs. Many EU nations have national debts well above their annual GDP. It is only a matter of time before a crisis in the European Union occurs. Any person that is educated on the weaknesses of economic interdependency would tell you that this crash is the fault of no-borders globalists. But, with populists rising to a moderate extent in the UK, Germany, France, etc., the globalists don’t have to take the blame for the failure of their supranational experiment.
Actually, they can use the crash to their advantage by blaming nationalism, then using the ensuing public fear as a springboard to launch a GLOBAL supranational union, first economically, and then in the form of a single world government. Why else would the ECB be taking on Christine Lagarde, the most vocal proponent of the global economic reset, as chairman at this time? This is about engineered chaos. This is about a Hegelian problem-reaction-solution dynamic.
As already mentioned, the Fed has just admitted in an indirect way that there is no economic recovery, and that there will be no QE until it is too late to even stall a crisis for a short amount of time. Trump has just admitted that the trade war is not going to end in his first term as president and that it will only get much worse from here on. All that is left is for a No-Deal Brexit to send shockwaves throughout Europe, and maybe another shooting war (Venezuela or Iran?).
Understanding the deeper objectives of the globalists can help us to prevent them from succeeding. At the very least, it helps us to avoid being duped into helping them. At any rate, the rest of this year is surely going to lead to what they call “interesting times”.