Is the Fed Ready to Cut America’s Fiat Life Support?
It is undeniable that America is thoroughly addicted to
fiat stimulus.
Every aspect of our economy, from stocks, to bonds, to
banks, and by indirect extension main street, is now utterly dependent
on the continued 24/7 currency creation bonanza. The stock market no
longer rallies to the tune of increased retail sales, growing export
markets or improved employment expectations.
In fact, “good” economic news today is met with panic and market
sell-offs! Why? Because investors and banks still playing equities
understand full well that any sign of fiscal improvement might mean the
end of the private Federal Reserve’s QE pajama party. They know that
without the Fed’s opiate-laced lifeline, the economy dies a fast and
painful death.
All mainstream economic news currently revolves around the Fed, as
pundits clamor to divine whether the latest signals mean the free money
will
flow, trickle or dry up.
Most expect the central bank to make an announcement today on the
details of its reduction in stimulus initiatives. Generally, the Fed
does not have a tendency to slip information to the media on the
possibility of a policy change unless they plan to follow through. Every
bailout and QE announcement over the course of the past five years has
been preceded by weeks and even months of “rumors” acclimating the
mainstream and the markets to the idea of each action long before it was
ever implemented. If the Fed avoids clarity on the taper in the coming
week, I expect that they will still assert stimulus cuts before the end
of fall.
Certain developments, though, are giving false hope to the markets
that the stimulus fantasy will go on forever. The resignation of Larry
Summers from the “running” for Fed Chairman (as if Obama isn’t being
told exactly who he is to pick for the position) has so far put a dash
of cheer into the Dow Jones. Strangely, investors seem to believe that
without Summers, continued quantitative easing is assured. The reality
is that the decision to cut stimulus has likely already been long
established and the face of the new chairman will have little relevance.
The idea of the Fed being divided by “hawks” and “doves” is absurd
propaganda designed to give the public a false impression that central
bank decisions follow some kind of democratic course. Central banks are
highly centralized and highly coordinated corporate entities, not
governmental councils prone to “debate.” And like any corporation, it is
certain that decisions are handed down from the top of the pyramid in
totalitarian fashion.
Who is at the top of the pyramid when it comes to the Fed? Only a
FULL audit would reveal the truth, and a full audit has never been
enforced in the 100-year history of the bank (the only meaningful
partial audit ever conducted examined the TARP bailouts, uncovering over
$16 trillion in crazed currency printing in that program alone). The
point is, the Fed is not a public institution (nor “quasi-public”), it
is private, and this private bank is now dominating every miniscule
fluctuation in the health of our financial system, openly.
Two questions loom like a black cloud over the stock exchange picnic:
1) Will the Fed cut stimulus soon, and if so, by how much?
2) If the Fed continues stimulus, how long can it last before the dollar’s value is decimated?
As I have been saying since the bailouts began in 2008, the Fed has
conjured a perfect Catch-22 scenario for the U.S. economy. If the Fed
cuts QE while conditions remain tenuous, the stark reality that we have
been living on borrowed time will be revealed. If the Fed continues
stimulus the catastrophe will take longer to unfold. But eventually,
foreign creditors will finish their strategy of dumping the dollar in
bilateral trade and our economy takes a dive anyway. Cancel stimulus and
we croak. Continue stimulus and we croak.
Obviously, given the total dependency the investment world has shown
towards QE, the markets will plummet without stimulus. Some predict a
“manageable” break in stocks, while others predict freefall. In any
case, those who think QE reductions are already priced into the markets
are fooling themselves. Keep in mind that before QE3 was announced in
September of last year, the Dow was struggling due to a lack of any
credible recovery signals within the system. Nothing has changed since.
There are no new developments that give clear indication that our
economy is any better off than it was a year ago, let alone five years
ago.
One thing I have learned over the years is to never underestimate the
power of blind human optimism. With a QE taper announcement this week,
it could take months before the general public and the investment sector
finally grasp the fact that the carpet has been pulled out from under
them.
There are many people out there who actually believe the recovery
hype being promoted in the mainstream, and I have to say, things are
getting a little schizophrenic. Some pundits are focusing on negative
data because they think it will influence the Fed to keep QE alive.
Others organizations appear to have a different agenda. Ratings and
analytic firm Moody’s, for instance, has recently released a
report claiming that all risk of returning recession has been essentially eliminated in the U.S.
This is, of course, news to most of us in the field of alternative
economic analysis, being that according to the fundamentals, we NEVER
LEFT the original recession which officially began at the end of 2007. I
would also point out that Moody’s was one of the same agencies that
played a considerable role in the derivatives collapse. Would you trust a
company that stamped every toxic derivative it examined with a AAA
rating to tell you what shape our financial structure is in?
Now, maybe it’s the “conspiracy theorist” in me, but I find the
release of this Moody’s report rather suspicious, just as I have found
the majority of the Labor Department’s overly optimistic unemployment
reports suspicious. It is highly likely that these fabricated numbers
hailing green-shoots recovery are being released in order to give the
Fed false precedent to begin cutting stimulus while distancing
themselves from blame over the eventual catastrophic results. In fact, I
guarantee that the Fed will cite reports like those produced by Moody’s
in order to vindicate taper actions.
So, why would the Fed use erroneous data to justify QE cuts today,
knowing that our system is addicted to fiat and will shrivel like a
raisin in the sun without it? Here’s the thing: The world is changing
rapidly, and the course of the next decade (if not the next century) may
be decided before this year is out.
The Syrian crisis is far from over. In fact, Russian diplomatic
measures have only raised the stakes.
Russia’s overt involvement proves
beyond a doubt that any military action on the part of the U.S. will
create escalation. The conflict is no longer only about President Barack
Obama vs. Bashar Assad.
Now, it is the U.S. vs. Russia, Syria, Iran,
China, etc. If diplomacy fails (the White House and Israel appear intent
to ensure it fails), the dire results will be clear to the majority
before this winter is over.
SEC regulators have called for the establishment of exchange “kill
switches”, which will be finalized over the course of this winter. A
recent Nasdaq shutdown caused by what regulators label a “software
glitch” is being used as the excuse for this centralized kill option
which will remain in the hands of… nobody knows yet. I would note though
that a streamlined kill switch option for stocks would be useful in the
event that a market crisis occurs and the establishment
wishes to control how much value in equities is lost from day to day:
China has recently announced that a “second economic revolution” will
be set in motion this coming November. While the details of this policy
shift are not yet certain, the Chinese have established that they plan
to move away from export reliance and place more energy into consumer
growth. This means FAR less interest in the U.S. consumer and the U.S.
dollar
as a world reserve currency.
Ben Bernanke’s term as Fed Chairman is set to end in January of 2014,
and it is my observation that detrimental policy changes commonly take
place while the responsible organizations are in transition, or just
past transition. Any debilitating consequences of QE cuts can be placed
at the feet of Ben Bernanke, while the Federal Reserve as a whole
remains shielded from reproach. And why should he care? Old Ben will be
sitting on a beach in the Caymans sipping mojitos while the rest of us
are suffering through dollar devaluation and market chaos.
In the meantime, the U.S. may be in the midst of global economic war,
or a shooting war, drawing all attention away from the central banks as
the culprits behind America’s fiscal demise.
Ultimately, QE cuts will be detrimental because they are MEANT to be
detrimental, and this is in pursuit of one of only two possible goals:
Either the Fed is seeking to deliberately undermine the U.S. economy in
order to set in motion a final collapse, or, the Fed wants to create
just enough desperation in order to force the American people to beg for
more stimulus, and thus force us to accept partial responsibility for
the eventual inflationary demise of the dollar. In either case, the Fed
serves one purpose – to secure the globalization of America by any means
necessary. A wounded America is more liable to embrace centralization
and abandon sovereignty than a strong America. I’ll let George
Soros
explain one more time just to drive the point home.
Click on the link below for Soros' explanation...
http://personalliberty.com/2013/09/17/is-the-fed-ready-to-cut-americas-fiat-life-support/
The process of globalized economic and political governance has been a
long and carefully planned one and the existence of a prosperous U.S.
is not a part of the program. There have been many events over the past
several decades that we can look back on objectively and understand the
role they played in the destruction of the U.S. as a sovereign nation.
At the edge of the Federal Reserve’s 100
th anniversary, it is
vital that we see the current developments for what they really are –
history changing, in a fashion so violent they are apt to scar America
forever.