Here’s the deal dear readers, just as argued repetitively here: the Federal Reserve will and can collapse the economy by simply tightening rates and ending quantitative easing, i.e., creating money out of thin air to purchase government bonds.
Actually ending quantitative easing which amounts to artificial demand should raise rates in and of itself. Though what probably happens is that the primary dealers knowing the Fed will pay top dollar for bonds, front run the auctions to buy bonds and them sells them to the Fed at a handsome profit. Meaning when you telegraph QE, it is unlikely gets the best price for the bonds at the expense of the people of the United States. But the banksters love it.
Needless to say, very cushy profits for the primary dealers, but alas those profits are now being choked off on schedule to undermine the economy and the Trump administration. Like I’ve argued, the Trumpster is the patsy to be left holding the bag when the music stops.
Question: will the downturn help the Democrats?
No. Once this baby begins unraveling it is going to be far worse than 2008, since nothing was ever fixed, and simply compounded. There is far more debt today than there was in 2008. When liquidations of positions are forced because of rising interest rates, it will get ugly very quickly. Why they say on Wall Street, “the pigs get slaughtered.”
Another way of saying traders over stay their welcome in the market. Instead of passing on the first 20 percent move, and final 10 percent move, they stay too long and get wiped out. 70 percent profit was simply not good enough for the pig. Gluttony begets gloom and doom.
We could very easily see a contraction of the money supply as people default on their loans like margin debt, which in turn will be fought with massive renewal of quantitative easing that destroys the dollar. And this was the plan all along of deindustrialization, and the goosing of military expenditures leading to massive Debt to GDP. The defeat of the United States by stealth.
There is of course another alternative to the described scenario: WAR. Rob other peoples of their resources and wealth, as we did to Moammar Khadafi in Libya when we stole the country’s gold reserves. For all intents and purposes, the U.S. is technically insolvent, and will frankly never pay back its loans except in debased currency.
As Germany also realized in 1938, there was an out. To rob its neighbors. The Deep State I’m willing to bet will also come to the same conclusion to save itself. Of course, when the Krauts fell into arrears, the first persons they stole from were their Jewish citizens. That too will also dawn upon our Deep State, like when Henry VIII turned his covetous eyes upon the wealth of the Catholic Church. And it was this expropriation that led to the transition from feudalism to capitalism.