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    Party While You Can – Central Bank Ready To Pop The ‘Everything’ Bubble

    Brandon Smith
    January 10th, 2018
    Alt-Market.com
    Comments (26)
    Read by 5,957 people

    This article was originally published by Brandon Smith at Alt-Market.com

    bubblepop1

    Many people do not realize that America is not only entering a new year, but within the next month we will also be entering a new economic era. In early February, Janet Yellen is set to leave the Federal Reserve and be replaced by the new Fed chair nominee, Jerome Powell. Now, to be clear, the Fed chair along with the bank governors do not set central bank policy. Policy for most central banks around the world is dictated in Switzerland by the Bank for International Settlements. Fed chairmen like Janet Yellen are mere mascots implementing policy initiatives as ordered. This is why we are now seeing supposedly separate central banking institutions around the world acting in unison, first with stimulus, then with fiscal tightening.

    However, it is important to note that each new Fed chair does tend to signal a new shift in action for the central bank. For example, Alan Greenspan oversaw the low interest rate easy money phase of the Fed, which created the conditions for the derivatives and credit bubble and subsequent crash in 2008. Ben Bernanke oversaw the stimulus and bailout phase, flooding the markets with massive amounts of fiat and engineering an even larger bubble in stocks, bonds and just about every other asset except perhaps some select commodities. Janet Yellen managed the tapering phase, in which stimulus has been carefully and systematically diminished while still maintaining delusional stock market euphoria.

    Now comes the era of Jerome Powell, who will oversee the last stages of fiscal tightening, the reduction of the Fed balance sheet, faster rate increases and the final implosion of the ‘everything’ bubble.

    As I warned before Trump won the election in 2016, a Trump presidency would inevitably be followed by economic crisis, and this would be facilitated by the Federal Reserve pulling the plug on fiat life support measures which kept the illusion of recovery going for the past several years. It is important to note that the mainstream media is consistently referring to Jerome Powell as “Trump’s candidate” for the Fed, or “Trump’s pick” (as if the president really has much of a choice in the roster of candidates for the Fed chair). The public is being subtly conditioned to view Powell as if he is an extension of the Trump administration.

    This could not be further from the truth. Powell and the Fed are autonomous from government. As Alan Greenspan openly admitted years ago, the Fed does not answer to the government and can act independently without oversight. So, why is the media insisting on misrepresenting Powell as some kind of Trump agent? Because Trump, and by extension all the conservatives that support him, are meant to take the blame when the ‘everything’ bubble vaporizes our financial structure. Jerome Powell is “Trump’s guy” at the Fed; so any actions Powell takes to crush the recovery narrative will also be blamed on the Trump administration.

    But, is it a certainty that Powell will put the final nail in the coffin of “economic recovery?” Yes. Last Friday the Fed finally released the transcripts of its monetary policy meetings in 2012, and in those transcripts are some interesting admissions from Powell himself. After reading these transcripts I am fully convinced that Powell is the man who will stand as the figurehead of the central bank during the final phase of U.S. decline.

    Here are some of the most astonishing quotes by Powell from those transcripts along with my commentary. These quotes are yet another piece of evidence that vindicates my position on the Fed as an economic saboteur and my position on the historic market bubble the bank has created:

    Powell: “I have concerns about more purchases. As others have pointed out, the dealer community is now assuming close to a $4 trillion balance sheet and purchases through the first quarter of 2014. I admit that is a much stronger reaction than I anticipated, and I am uncomfortable with it for a couple of reasons.

    First, the question, why stop at $4 trillion? The market in most cases will cheer us for doing more. It will never be enough for the market. Our models will always tell us that we are helping the economy, and I will probably always feel that those benefits are overestimated. And we will be able to tell ourselves that market function is not impaired and that inflation expectations are under control. What is to stop us, other than much faster economic growth, which it is probably not in our power to produce?”

    Assessment: By all indications the Fed did do more, MUCH more. Including QE3, various stimulus packages and incessantly low interest rates for years, the Fed has essentially stepped in every time stock markets in particular were about to crash back to their natural state of decline. Powell is being rather honest in his estimation here that these stopgaps are in fact temporary and that the Fed cannot produce true economic growth to support the market optimism they have created through their interventions. He is stating openly that markets will only remain optimistic so long as they are assured that the Fed will continue to intervene.

    This is probably why it took almost six years before these transcripts were released.

    Powell: “When it is time for us to sell, or even to stop buying, the response could be quite strong; there is every reason to expect a strong response. So there are a couple of ways to look at it. It is about $1.2 trillion in sales; you take 60 months, you get about $20 billion a month. That is a very doable thing, it sounds like, in a market where the norm by the middle of next year is $80 billion a month. Another way to look at it, though, is that it’s not so much the sale, the duration; it’s also unloading our short volatility position.”

    Assessment: And here we have Powell’s shocking admission, clarifying his previous point — the “strong response” that Powell is referring to is a market reversal, or bubble implosion. He even admits the existence of the Fed’s “short position on volatility.” This explains the strange behavior of the VIX index, which has plunged to record lows as “someone” continually shorts VIX stocks in order to interfere with any decline in markets.

    This interference in the VIX has conjured an aberration, a market calm and investor confidence that is artificial. Such overconfidence, when optimism turns into mania, has happened before. In fact, the end of the Greenspan era was awash in such exuberance. And this delusion always ends the same way — with crisis.

    I would also like to mention here that I have seen some disinformation being planted on Powell’s statements in 2012, asserting that he was “not talking about stock markets” specifically. Obviously he is, as you will see in other parts of his statement, but to reinforce the point, here is a quote from another Fed member who spilled the beans, Richard Fisher:

    “What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.

    It’s sort of what I call the “reverse Whimpy factor” — give me two hamburgers today for one tomorrow.”

    Fisher went on to hint at his very reserved view of the impending danger:

    “I was warning my colleagues, Don’t go wobbly if we have a 10 to 20 percent correction at some point… Everybody you talk to… has been warning that these markets are heavily priced.” [In reference to interest rate hikes]

    So, what happens when the Fed stops shorting volatility and ends the easy money being pumped into markets? Well, again, I think Powell and Fisher have just told you what will happen, but let’s continue.

    Powell: “My third concern — and others have touched on it as well — is the problems of exiting from a near $4 trillion balance sheet. We’ve got a set of principles from June 2011 and have done some work since then, but it just seems to me that we seem to be way too confident that exit can be managed smoothly. Markets can be much more dynamic than we appear to think.

    When you turn and say to the market, “I’ve got $1.2 trillion of these things,” it’s not just $20 billion a month — it’s the sight of the whole thing coming. And I think there is a pretty good chance that you could have quite a dynamic response in the market.”

    Assessment: The Fed balance sheet is being reduced NOW, and Powell as chairman will only continue the process if not expedite it. Some people may argue that Powell is displaying an attitude that would suggest he is not on board with tightening policies. I disagree. I believe Powell will make the argument that the band-aid must be ripped off and that stock markets need some “tough love”.

    In fact, Fed members including Yellen and former member Alan Greenspan (is there such a thing as a “former” member of the Fed?) have already been fielding the notion that stock markets are suffering from “irrational exuberance” and that something must be done to “temper inflation.”

    Powell is also acknowledging the mass-psychological aspect of investors, now trained like Pavlovian dogs to salivate over stock tickers instead of thinking critically on the implications of equities that “can’t lose”.  When they finally begin to realize that equities can indeed lose, and that the Fed is going to let them lose, what will the result be, I wonder?

    Powell: “I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.”

    Assessment: Wow! And there you have it. The new Fed chair’s own prognostications. He even used the dreaded “B” word  bubble. Yes, as I have been arguing for quite some time, the Fed will continue to raise rates and cut off the low cost money supply to banks and corporations that has helped boost stock markets as well as numerous other asset classes.  And now we discover after six years a Fed official, soon to be the Fed chairman, telling you EXACTLY what is about to happen within American markets, reinforcing my long held position.

    Powell even mentions that “this is their strategy.” Now, that could be interpreted a few ways, but I continue to hold that the Fed plans to deliberately crash markets and that this will be a controlled demolition of the U.S. economy.

    Trump may actually clash with Powell over these measures in the near future, considering Trump has thoroughly taken credit for the insane stock market rally that has dominated since his election. But, this will only add to the fake drama. Imagine, the very man Trump “picked” as the new head of the Federal Reserve undermining the market bubble which Trump boasts about on his Twitter account. The Kabuki theater will be phenomenal.

    All the while, the true culprits behind the bubble and the crash, the international financiers and banks, will escape almost all scrutiny as the public mindlessly follows the political soap opera played out in the mainstream media.

    ***

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    You can contact Brandon Smith at: brandon@alt-market.com

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    Author: Brandon Smith
    Views: Read by 5,957 people
    Date: January 10th, 2018
    Website: http://www.alt-market.com/

    Copyright Information: This content has been contributed to SHTFplan by a third-party or has been republished with permission from the author. Please contact the author directly for republishing information.

    26 Comments...

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    1. Old Guy says:

      When the bubble pops. That’s when the real party begins. Heck let it happen. Im only getting older. If its going to happen Just as well be sooner than later. When those riots occur the military will declare Martial Law. And use chemical and biological weapons to kill the culls. Like it states on those Georgia Guidestones. Reduce population. If you intend to survive you better have a remote cave and be adept at a stone age existence for a year or two.

    2. John Stiner says:

      I need the central bank to come over here and pop this zit on my ass.

    3. Menzoberranzan says:

      Look up your local/regional banker big wig. When it happens make them pay. It ain’t the top of the food chain but they are just as guilty. A big house and maybe some armed guards are not that big an obstacle to overcome. Taxman, scum big shots are all around so there are plenty of people that don’t get to live either.

    4. Philosopher Deplorabilis says:

      It has been stupid for Trump to brag about the stock market rise. And those claims will be his downfall. I think he was a better pick than Clinton. But pride goeth before the fall.

      It doean’t really matter. The Federal Reserve knows that most people in the US are financial illiterates that are brainwashed and have a herd mentality.

      I have been stacking PMs and cash for years. I expect to do just fine no matter what the Federales decide to do.

    5. PO'd Patriot says:

      The picture of that hooknose pubehead up above is starting to get on my nerves. Everyday that little bastud greets me here. If you want to buy Bitcoin then knock yourselves out but its getting to the point that Chuckles Schumer would be a better photo.

    6. rellik says:

      Bring on the Depression!
      All our shit is over valued
      and it costs too much!
      When I was a kid one person,
      my dad, working could support
      a wife and four kids.
      Today it takes two people working
      to support themselves and ONE kid.

      • Anonymous says:

        So true. Makes me wonder why people are still having kids. No future for us right now.
        I know a lot of twenty somethings that are optimistic and cheerful. I’ll bet you they won’t
        be that way in 5-10 years. I suppose Prozac can do wonders. We live in the real world.

        • freedomfighter says:

          And this is another agenda 21 social engineering ploy that has worked – on a statistical basis, depopulate the smart producers in the USA and institute barbarians whom will kneel for their sustenance – human rights disappear and the native citizen is then compromised and has to kneel next to the instituted barbarian immigrant. They have bred like rats while you can only support 1 child; this serves 2 purposes – you are now outnumbered and they now have the numbers to affect elections; and their entitlements live on while you are slave labor to the same job the immigrant faked pursuing.

    7. Sgt. Dale says:

      LAH BLAH BLAH!!!
      Heard this for 10 years now. I’m from Mo. SHOW ME!!!
      Sgt.

    8. watching and waiting says:

      Party While You Can – Central Bank Ready To Pop The ‘Everything’ Bubble

      UH,Duh? That is why we prep? Did I miss something here?

    9. Asshat says:

      I’ve said it a million times get prepped and stop buying shit. If it doesn’t help you become more independent from the consumer economy don’t buy it. For me I spend most of my time making $ and don’t have time to spend $ on the good life. I’ve learned to live hard and know what I need and don’t. There is very little you need. If you buy shit you don’t need your helping corporations keep you down. You should be taking their $ and hoarding it. Don’t help ceos get record bonuses.

    10. The Federal Reserve is NOT Federal at all, but an entity of 9 privately owned banks.

      President Kennedy went up AGAINST the (so-called federal) reserve and we see what happened on 11/22/63, when a conglomeration of entities (CIA, fed reserve, military, organized crime) got their wishes when Mr. Kennedy was shot down like a DOG, in Dallas.

      You can read all about why he died and why it matters to this day in James Douglass’s award winning book, “JFK and the Unspeakable: Why He Died and Why It Matters”.

      Of all the Presidents we have had since, in my judgment, the one with the MOST testicular fortitude is Mr. Trump.

      No wonder they want to malign him and handsomely pay psychiatrists to give him a diagnosis that is not really there.

      When they attack the President, they attack you.

      When they malign him, they undercut the very freedoms and liberty for which countless Americans fought and gave their lives.

      IF this group succeeds in removing the duly elected President of the United States, Donald J. Trump, then they WILL utilize U.N. and other foreign troops already here to remove and completely dismantle the Constitution and the Bill of Rights by declaring Martial Law, and THEN remove each of US to be killed in FEMA Camps, legislated and supported and run largely by psychopaths with no conscience who will stop at NOTHING to accomplish the wishes of their leader: satan himself.

      These extermination camps were not even used by Obama to house overflowing refugees!

      Is that in and of itself PROOF ENOUGH that we must use EVERY moral AND legal means to STOP these psychopaths?

      God bless you all.

      – the Lone Ranger

      “Whenever you have eliminated the impossible, whatever is left, however improbable, must be the truth.” – Sir Arthur Conan Doyle’s character, Sherlock Holmes

    11. lena says:

      world fed banks are scheduled to really start pulling moneu out in april. if they stick to that, you can book a recession in six months.

    12. Concerned Citizen says:

      The financial markets are ALL a complete scam…Don’t worry, you can trust the US Gov’t, no worries at all folks.

    13. Travis bishop says:

      Kill the lawyers first. Then the bankers. Any cops who try to defend them get it, too. That’s the point where we take back control of our community and put foot to ass on this overbearing government and its ridiculous regulation of free markets and trade. Bring back the tried and proven barter system

     

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