This article was originally published by Brandon Smith at Alt-Market.com
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.
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Trump: We Are in a Big Fat Ugly Bubble
At least more eyes today than yesterday are becoming aware of the Federal Reserve. Put them in and keep them in the spotlight.
A privately owned bank lends the US currency at interest…
16th amendment makes us and our labor capital to be borrowed against.
A Prudent Man sees danger and takes refuge but the simple keep going….and suffer for it!
LOL.Ron Paul tried for many years.Trump and te rest are owned by the banksters and that’s a fact.
No doubt. Nobody who understands the greedy power rich world of the Top International Bank owners knows that they LOVE LOVE LOVE the kabuki theater that keeps ALL of the attention of them and their behind the scenes machinations and manipulations.
A PRUDENT MANKIND would seek them out and eliminate them from the earth, But sadly t it will never happen and so the wars and crashes will go on as planned.
Great post. The main thing to worry about is WHAT we do during and after the collapse. It’s coming. The leftist, who love to gather in human resource office, will always try and hire only their own kind. Ditto on bureaucrats who will ONLY help their own kind.
We, as libertarians, alt=righters, Patriots and constitutionalists, have to start playing unfair, like they do. Favor one another. If you know someone is a democrat, be totally opposed to them. we need to wake up and oppose leftists everywhere we meet them. This IS the next phase of CivWII. We didn’t start the fire, THEY did.
The Progressives are luciferian in their avowed attempt to wipe out Western Civilization, our flaf, our constitution, and their avowed hatred for Christianity in particular..
The battle is fought everyday as we resist in big and little ways against all of the emplaced Progressives everywhere we find them, or they find us.
THIS is how we survive SHTF, together, united in our support and fight for FREEDOM. Pelosi, Schumer, Waters and all of the other Freedom-haters can kiss my clunky combat-boots.
I cannot force these haters to love freedom, but I CAN force them to leave our rights alone. YES WE CAN! YES WE WILL!
Here is an article that looks at how the debt load of Corporate America has grown since the Great Recession:
This problem has been created by a decade of the Federal Reserve’s imaginative policies and will make the next recession far worse than the recession in 2008 – 2009.
The game is RIGGED. The markets are RIGGED.
The economy is RIGGED. Elections are rigged.
The top 7% wealth holders, Internationalist, Bankers.
These people running things want you sick and in ill health.
They want you BROKE. Broke and dependent. Under control.
They want you confused by the chaos they create.
They want you dumbed down.
They want you unarmed.
They want you DEAD. They consider YOU the enemy.
AI, Robots, Disease, 5G network control/kill grid, These they will use to destroy you.
This is “Your” government at work.
* * * * * *Do you understand that?
No matter who wins an “election”. Does not matter. Same dirtbags controls and runs things from shadowed obscurity.
Fear not. God is with you. God never fails. No matter how bad things appear to be. God is good. His ways are beyond our understanding. Things will be set right by God.
What exactly does god win when so many innocent beings are suffering on a daily basis?
The bible was made so the poor wouldn’t kill the rulers/rich for I do believe there is a creator and we didn’t just happen from a big bang and evolution but religion and brainwashed minds have fought wars over what they believe and if you disagree you will be eliminated the Christian bible says some where Genesis the creator spoke everything in to existence and for we have the same ability so if we keep speaking on fear we will always live in fear ….for example the crash or n.w.o(by the way the new world order is not coming its already here because for years it was spoke on)or atom war what ever it maybe if you think it and speak on it and if anuff minds do the same and believe it will become a reality from your thought so why not use that wonderful gift we all where giving by god/the creator or what ever you would like to call it and use it to make life better instead of living in fear because of some SCARE TACTICS
Another Brandon Smith article where the elites wanted Hillary so they could control her, and they are also glad Trump is in so they can “blame” him for the crash.
Yes, everyone is a puppet and the elites control everything. Maybe you are controlled? Maybe this site is? Maybe everyone is so we are all elite! So what shall we do Brandon just all commit suicide because there is no hope?
Is that what he said? I didn’t read that in there. Smith writes about solutions all the time, but some people want easy solutions and they don’t like to hear what he has to say. Trump was a fake out. An easy solution that’s not really a solution because the banking demons have had him by the short hairs for a long time, ever since they bailed him out of his debts in the 90s. You sound like you want an easy solution. Sorry, there are none.
Ever face say a wood-working project where you discover that the ruler was off? Or something similar, like having used by mistake 2 different measuring tools? You’re approaching the final assembly and realize that the pieces just don’t fit. What must you do? Remake the pieces, right? More or less start over and be sure you use the same measure throughout, and double-check as you go. In other words, do it right, no assumptions, a clean slate of sorts. The mis-fit parts can’t be cut larger, now can they. Or the correct size parts can’t be cut smaller and fit the purpose as planned. Our system is the same right now. I’d say start with the measure… the Fed, and get rid of it for a system of measure that is valid.
Time to grease the Guillotine rails.
The globalists will tempt you with a great reset based on debt forgiveness. Wait and see. Democrats, Republicans, Socialists, conservatives, liberals, and Libertarians all are for it.
The ultimate cost will be high as it will likely require a world currency xoupled with global oversight thus a loss of sovereignity.
“The globalists will tempt you with a great reset based on debt forgiveness. Wait and see. Democrats, Republicans, Socialists, conservatives, liberals, and Libertarians all are for it.
People will fall for the sucker play that they will DO ANYTHING to not have to sacrifice from their current standard of living or negotiate the mildest affects to it, so they will go along with this play. Human nature/ human psychology exploits personal laziness and the aversion to personal SACRIFICE AND SUFFERING.
The ultimate cost will be high as it will likely require a world currency Coupled with global oversight thus a loss of sovereignty.
Exactly as the bankers have set into motion and WANT people to do. They have herded them into the chute of least personal impacting hardships and the sheeple will go along with it as the chute narrows straight into the killing chute / or kill zone on the battlefield. I don’t know why Mac deleted my moderated post..its a disturbing regularity lately. Truth averse.
There’s a new NAFTA agreement that is more favorable for the USA.
Thank you Lord, the treasonous Lolita Island vice peddling Satanist pussy grabbing GMO gobbling PSYCHOPATH Billionaire thief PEDOPHILE Orange Satan TRUMP will soon be IMPEACHED……thank you, thank you, thank you to our Lord and Savior Jesus Christ for RIGHTEOUS JUDGEMENT being passed on the Satanist PEDOPHILE PSYCHOPATH “ungodly” Monster Orange Satan TRUMP and his damned and doomed Satanist followers and supporters!!!!
I didn’t know that TDS could string together that many adjectives together. Must be that new fangled edumacashun that them there fancy unidiversities offer with their participation certificate rewards….
It’s Ron Ahrens again under a new moniker.
Drinking the wrong color kool aid again, I see.
Must have read the same Miami Herald piece I saw, except it was some jew named Epstein, not someone of germanic descent named Trump.
Look it up.
Keep wishing Ron…….
I do not need to wish anything, Judgement has already been passed on the vice peddling pussy grabbing PEDOPHILE PSYCHOPATH Satanist, our Lord and Savior Jesus Christ will take care of the rest for the COWARDK+LY Little Boy Orange Satan Trump when he faces him for sentencing into the LAKE OF FIRE, where all the “ungodly” like Donald Trump go DIRECTLY after they face our Lord!!!!!!.
They sold America’s Uranium to Russia also, they sacrifice and torture children DAILY, and NOTHING, ABSOLUTELY NOTHING is ever ever ever going to happen to Orange Satan Trump’s fellow evil vile disgusting Luciferian Fallen Angels and Demons controlling the criminal treasonous United States CORPORATION Government from the inner pits of the bowels of hell in Washington DC…ABSOLUTELY NOTHING IS GOING TO HAPPEN AND NONE OF THESE DEMONS WILL EVER BE ARRESTED AQMERTICAN COWARDS!!!!!
I think you, Apostle Ron, have something in your own closet. You protest too much as Shakespeare once wrote. What? You lose your frequent flier miles on the Lolita Express? Or something personally more local? I’d ask you, did you support the last POTUS more? Prefer gay relationships perhaps? Find it more reasonable to sanctify politically-speaking man-goat love? Or did the last time you try to stump break a cow, she kicked you? Inquiring minds want to know.
Every INSANE Trumpbot Satanist pedophile American COWARD on here, like this deranged New Babylonian Babbler, would gladly hand over their damned and doomed already chemically lobotomized children to the Satanist PEDOPHILE vice peddling pussy grabber Orange Satan Trump for a trip to Lolita Island if their New Babylon GOD Orange Satan Trump asked the COWARD Satanist Americans to do so……..that is the really, really, really sick and disgusting REALITY of the deranged Satanist pedophile PSYCHOPATH loving TRUMPBOTS, in the collapsing Police State hell on earth of damned and doomed New Babylon America!!!!!
Heartless, Ron is just part of the entertainment here.
The children you and ALL the filthy vile evil disgusting American Munchausens Satanist parents should of NEVER had are the “entertainment” on Lolita Island and other Satanist Pedophile locations around the collapsing Police State hell of filthy vile evil disgusting Satanist sodomite pedophile loving America, where all the Satanist sodomite Pedophile GODS like Orange Satan Trump are worshipped by the dumbed down toxic dump drunken bum COWARD PUSSY SATANIST AMERICAN FILTH!!!!
Skipped your Lithium again Ron. Not good. It’s the little white one.
Very compassionate, you christian you.
JUDGEMENT HAS ALREADY BEEN PASSED ON THE POLICE STATE HELL ON EARTH OF DAMNED AND DOOMED NEW BAYBLON AMERICA!!!!!! Our Lord and Savior Jesus Christ and the Creator of the Universe have ABSOLUTELY NO COMPASSION for vice peddling pussy grabbing genocide supporting Billionaire THIEFS and SATANIST PSYCHOPATH LOLITA ISLAND PEDOPHILES, like GMO gobbling chemically lobotomized Orange Satan Trump, and his murderous genocidal COWARD PUSSY CORPORATE WHORE Military Junta of the most vile evil disgusting treasonous criminal COWARDLY CORPORATE WHORE Monsters the world has ever known!!!!!! Thank you Lord and Savior Jesus Christ and the Creator of the Universe for these FACTS and for already passing Judgement on these Monsters and their damned and doomed supporters!!!!
Well, at least Ron makes a lot more sense than eisenkreutz, I’ll give him that.
Lithium? Maybe SSRI withdrawal!
Very plausible suggestion. Always let the enemy escape on the path that seems to be the least damaging path of self sacrifices, except like any good battlefield strategist would understand, that what seems to be an escape route is the enemy getting you to go EXACTLY where they want you, into their [kill box]. Human psychology implies that the people are so predictable, they will make the exact choice the enemy wants them to make because people are lazy, they are stupid, they are risk averse, and they completely LACK personal investment and responsibility and sacrifice for their standard of living, so when they weigh their own circumstances, they will ALWAYS lavish themselves as best they can from a situation rather than cut away from all the apparent self serving aspects. Humans are so stupid and predictable.
My reply was aimed at Maranthas comment…
“The globalists will tempt you with a great reset based on debt forgiveness. Wait and see. Democrats, Republicans, Socialists, conservatives, liberals, and Libertarians all are for it.
The ultimate cost will be high as it will likely require a world currency coupled with global oversight thus a loss of sovereignty.”
And then these morons will call it a “win” too…
Everyone expects a rapid collapse when in actuality we have been slowly collapsing with 930% inflation since Eisenhower.
True survival and thriving is making common sense decisions to cope with that inflation. Our ancestors coped by using practical skills like agriculture, bushcraft, and fixing it yourself.
I don’t believe in any soap opera, where there is a unitary executive, giving orders.
Or, where there is no obvious signs of moral authority.
In either case, not my dog. I disavow.
Qoute:The average person is completely unaware of the Hegelian con-game being played here.
We are not unaware, we are powerless to stop it.