This article was written by Brandon Smith and originally published at Alt-Market.com.
Editor’s Comment: What goes up must come down. This action has been planned for sometime. It is clear that the Federal Reserve pushed the QE liquidity bubble to its absolute extremes during the Obama years, knowing all along that it would simply raise rates once the ride was over. Now that this is beginning to happen, at the timing of the Fed’s choosing, it is being dumped on the Trump Administration. And President Trump has been shaping the narrative for his fight against the bank’s policies since the during his campaign.
Who really is pulling the strings in such a battle? Will there be any meaningful reforms (The Dodd Frank Act was a half-measure at best)? Will the popped bubble crash the economy and leave Americans stranded? Only time will tell.
In A Battle Between Trump And The Federal Reserve, Who Really Wins?
by Brandon Smith
As a part of the increasingly obvious set-up of conservative movements by international banking interests and globalist think-tanks, I have noticed an expanding disinformation campaign which appears to be designed to wash the Federal Reserve of culpability for the crash of 2008 that has continued to fester to this day despite the many claims of economic “recovery.” I believe this program is meant to set the stage for a coming conflict between the Trump Administration and the Fed, but what would be the ultimate consequences of such an event?
In my article ‘The False Economic Recovery Narrative Will Die In 2017’, I outlined the propaganda trap being established by globalist owned and operated media outlets like Bloomberg, in which they consistently claim that Donald Trump has “inherited” an economy in recovery and ascendancy from the Obama administration. I thoroughly debunked their positions and “evidence” by showing how each of their fundamental indicators has actually been in steady decline since 2008, even in the face of massive monetary intervention and fiat printing by the Fed.
My greatest concern leading up to the 2016 election was that Trump would be allowed to win because he represents the perfect scapegoat for an economic crisis that central banks have been brewing for years. Whether or not Trump is aware of this plan cannot yet be proven, but as I have mentioned in the past, his cabinet of Goldman Sachs alumni and neo-con veterans hardly gives me confidence. In the best case scenario, Trump is surrounded by enemies; in the worst case scenario, he is surrounded by friends.
Trump’s loyalties, though, are a secondary issue for now. The primary focus of this article is to discern whether or not a battle between Trump and the Fed will result in a net positive or a net negative for the public. My position is that any action against the Fed should have happened years ago, and that today, the Fed is nothing more than a sacrificial appendage of a greater globalist agenda. Meaning, conservative groups should be aware that a victory over the Fed is not actually a victory over the globalists. In fact, the globalists may very well WANT a war between the Fed and the White House at this time.
First, some facts need to be established to counter the propaganda claims that the Fed is some kind of innocent victim of a rampaging President Trump or “misguided” conservative rhetoric.
The Scapegoat Setup Continues
The latest extension of the Fed’s propaganda has been initiated, of course, by the mainstream media and liberals in general; you know, the same people that were applauding the (in some cases misguided) efforts of the Occupy Wall Street movement. With Trump’s negation of the Dodd-Frank Act, the media has been looking for any opportunity to assert that Trump is either acting to enrich his corporate friends or that he is an idiot man-child when it comes to matters of business and economics.
This led to some sniping by Elizabeth Warren and Federal Reserve Board Chair Janet Yellen‘s testimony before congress last week. The argument? That Trump was wrong or “lying” when he said that Dodd-Frank had frozen loans from major banks. You can see the glee in media outlets over the stab; a recent article by Vanity Fair, which seemed to focus more on snide ankle biting of Trump than concrete evidence, is a perfect example.
Now, in Trump’s defense (or at least, in defense of his position), Yellen is actually the one lying, here. While it is true that commercial lending has expanded, her claim that small business loans have improved is simply false. Even Bloomberg begrudgingly acknowledges that small business loans have fallen by at least 6% since the passage of Dodd-Frank. In Obama’s favorite liberal home-base, Chicago, loans to small neighborhood businesses declined by 49% between 2008 and 2014.
In 2015, Yellen herself argued that small business loans were in decline because small business owners “don’t want loans anymore.” This is a bit like the Bureau of Labor Statistics arguing that over 95 million unemployed working age Americans should not be counted as unemployed in their stats because they really “don’t want a job.” It is an attempt to muddy the waters on the greater issue, which is that the U.S. economy is in considerable danger.
You see, I don’t think Trump was debating that major corporations and banks were not receiving ample loans, I think he was primarily pointing out the disparity in small business loans and personal loans. Yellen and the mainstream media attempted to use one data point — commercial loans, to dismiss the entire debate over loan stagnation.
The Fed Is Culpable For Our Bubble Economy And Trying To Shift Blame Before A Collapse
The fact is, we all KNOW that major corporations and banks have been flooded with ample loans, and much of this capital was conjured out of thin air by the Fed itself through fiat creation and near zero interest rates. We know this because of the $16 trillion in loans made to companies around the world exposed by the revealing (but limited) TARP audit. We also know this because much of these loans have been used to inflate the stock market bubble for the past few years through endless stock buybacks that most companies never would have been able to afford otherwise. We also know that the mainstream investment world is aware of the importance of these loans because they started to panic as the Fed announced its ongoing program of interest rate hikes.
Beyond that, we know that the Fed’s low interest loans and culture of circular inbred lending between corporations and banks have been instrumental in keeping stocks hyperinflated, because Fed officials have OPENLY ADMITTED that this is the case. As Richard Fisher of the Dallas Fed stated in an interview with CNBC:
“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. I’m not surprised that almost every index you can look at … was down significantly.” [Referring to the results in the stock market after the Fed raised rates in December 2015.]
“…I was warning my colleagues, “Don’t go wobbly if we have a 10-20 percent correction at some point. … Everybody you talk to … has been warning that these markets are heavily priced.”
So, again, the issue is not whether or not banks are lending, we know they are lending, they just aren’t lending to the people that need it most.
I think Fisher was dishonest in his evaluation of the extent of the consequences of the Fed bubble and that a 10% to 20% drop in equities is an absurd underestimation. But setting aside the “little white lies”, it is at least widely available knowledge that the Federal Reserve initiated a corporate loan free-for-all, knowing that the supposed benefits were limited in scope as well as in duration. They know that a crash is coming, and they have been stalling until they can find the right scapegoat to divert blame. That scapegoat is Trump, and by association, all conservatives.
As far as Dodd-Frank is concerned, the act was supposed to be a primer for stopping destructive behavior in the financial sector, more specifically in derivatives. Yet, in spite of Dodd-Frank, banks like Citigroup are STILL bloated with derivatives after receiving at least $476 billion in taxpayer funds to stop them from going bankrupt for the very same irresponsibility.
Dodd-Frank accomplished absolutely nothing in terms of what it was mandated to do. I believe the only true purpose of Dodd-Frank was to distract everyone from Ron Paul’s Fed audit bill, which was gaining major traction at the time.
Liberals And The Fed Become Bedfellows?
So, why does Trump’s undercutting of Dodd-Frank even matter? As outlined above, it is a propaganda point for the establishment to perpetuate the narrative that Trump is incompetent, that the people who support him are incompetent, and that when the economy does shift into greater crisis it will be his fault and the fault of conservatives. It is also a springboard for the Federal Reserve to “attack” Trump, as shown in Yellen’s congressional testimony.
I also find it interesting that through the Dodd-Frank issue as well as others, leftists are being galvanized in support around the Federal Reserve, something that they probably would not have done a couple of years ago. This is all culminating in what I believe will become a titanic battle not only between Trump and Leftists, but also between Donald Trump and the Fed. But why would the establishment want to incite a conflict between the president and the central bank?
This is something conservatives and liberty activists have wanted for decades — a president that would be willing to take on the Federal Reserve and expose its innards. The problem is, the time for the effectiveness of such an action is long gone. Auditing the Fed under Obama (an openly pro-globalist president) would have been a disaster for the powers that be. It would have thrown their entire agenda into disarray and killed any chance that they could complete what they call the “great global economic reset.” Auditing or shutting down the Fed under Trump is another matter.
As I examined in detail with evidence in my article ‘The Economic End Game Explained’, the Federal Reserve has a shelf life. It has already served its purpose, which was to undermine the American economy and our currency system. The Fed will now begin deflating the bubbles it has engineered in stocks, Treasuries and the dollar through continued interest rate hikes and rolling out the over $4 trillion (official amount) on its balance sheet. The goal? Sinking America and reducing it to third world status over the course of the next several years to make way for total global centralization of economic administration, eventually leading to global fiscal management under the IMF and perhaps the BIS, and a global currency system; all while making conservative movements look like the monster behind the crisis.
To summarize, the U.S. economy and the dollar are slated for a controlled demolition. The Fed will do everything in its power to prod Trump and conservatives into war with the central bank, because the Fed is now ready to sacrifice itself and the dollar’s world reserve status in order to clear a path for a new global system and ideology. The Federal Reserve is a suicide bomber.
If this takes place as I predict then the international banks and the establishment elites will be able to lay the blame for the death of king dollar squarely at the feet of Trump and conservatives, and at least a third of the country (leftists) will buy into the narrative lock, stock and barrel because they desperately WANT to believe it. Remember, the tale being scripted here is that Trump is a rampaging maniac that does not know what he is doing.
To be clear, I am not supporting the continuing dominance of the Fed, or the existence of the fiat dollar. What I am saying is that conservatives may just get what we have been wishing for all these years but not in the manner we had hoped.
To counter this threat our list of targets must expand to meet reality. The delusion that the core problem is the Federal Reserve must stop. The Fed is a box store, a franchise in a chain of franchises, nothing more. If we do not also turn our scrutiny and aggression towards root globalist institutions like the IMF and the BIS as well as international banks, then our efforts will only serve to bolster the enemy we are trying to fight.
In a battle limited to Trump versus the Fed, only the bankers will win.
This article was written by Brandon Smith and originally published at Alt-Market.com.