The Trump Collapse Scapegoat Narrative Has Now Been Launched…”Last week’s stock dive was, in my opinion, the official launch of the Trump collapse narrative.”
Brandon Smith
Alt-Market.com
Wednesday, 24 May 2017
Last week was a rather crazy one for the news feeds, with cyber attacks and “Comey memos” and a host of other wild mayhem, it may have been difficult for many people to keep track of it all. That said, there was one event that I think went partly under the radar, and I think it is an important signal for anyone concerned with the ongoing process of economic collapse in the U.S.
Generally, the American public holds very little vigilance when it comes to economics. They are distinctly unaware of fundamental indicators such as commodities demand, energy usage, manufacturing, imports, exports and international shipping, etc. What they do take note of, and what the mainstream news will tell them about in 30 second blurbs, is the state of unemployment and whether stock markets were down for the day or up for the day. These two “indicators” are the extent of the average person’s exposure to fiscal health.
This is why the Federal Reserve and the establishment have been meticulous over the past several years in their efforts to keep employment statistics highly manipulated to the positive side and why they have been injecting untold trillions into stocks around the world through various measures including no cost overnight loans.
However, over the past couple of years something has changed. As I warned they would do in 2015 in my article The Real Reasons Why The Fed Will Hike Interest Rates, central banks including the Fed have been backing off of stimulus measures and they have now begun a series of interest rate hikes. Look at it this way — imagine the economy has a terminal disease and the only thing keeping it alive is a highly addictive drug called “free money.” It’s a rather terrible life, barely worth living, but the economy still has a faint pulse as long as the drug is administered. Now, what would happen if the Fed suddenly cuts off the drug supply? Well, the economy will die in a very frantic and horrible way.
Low interest rates and Federal Reserve loans represent the purest form of the free money drug, even more so than the bailouts and QE. And now, those interest rates are rising, and the drug is being taken away.
These marginal rate hikes might not seem like much — .25 basis points here and .25 basis points there. And they are not much, unless you are a corporation borrowing billions of dollars at a time so that you can stave off your exposure to quadrillions in derivatives debt and so that you can purchase massive shares in your own stock to keep its value artificially elevated. Cycling this borrowed cash and paying the Fed back is rather easy for such corporations as long as the loans are essentially free. But when they have to start paying interest on that cash, even at a low rate, the costs add up at lightning speed.
ANY interest rate hikes in this environment make borrowing from the Fed untenable for corporations seeking to prop up their stocks and the stock market at large.
In my estimation, based on previous Fed measures such as the removal of QE from the system in 2014, it takes around six to eight months for the effects of policy shifts by the Fed to become visible on the main street economy and in equities. I believe we are about to see the effects of interest rate hikes on our system within the next couple of months.
I put very little value in stock markets as an indicator of anything. In reality, stocks are a fraudulent circus based on perceived value and perceived demand rather than true value and demand. In most cases, stocks crash in the FINAL phase of an economic collapse, not in the beginning phase. If you decide to start preparing for a crisis after a stock market decline then you are probably too late.
I am revisiting this topic here because I want to remind people that the full and tantamount blame for any economic crisis (and the final phase market crash) in the near future is placed on the Federal Reserve and international banks. All future shocks to the financial system were made possible because the establishment and the Fed have gutted our economy, stuffed it with the fluff of fiat stimulus and left it to lumber aimlessly since 2009.
Now, because of the Fed’s efforts, stocks have been rising for quite some time with only a few moments of obstruction, due again, to their policy shifts. These efforts have conjured a 20,000 point Dow Jones, but nothing else positive for the economy. The one constant, though, has always been low interest rates.
With interest rates increasing, I would point out that market behavior has changed. The meteoric rise has stalled. In the past few months stocks have barely budged 1 percent either up or down per week. Except for last week when something strange happened; markets suddenly dropped nearly 400 points in a single day. Why? Well, that is a subject up for debate, but the majority of mainstream news outlets will tell you that it was all Donald Trump’s fault.
I have been warning since long before the election that Trump’s presidency would be the perfect vehicle for central banks and international financiers to divert blame for the economic crisis that would inevitably explode once the Fed moved firmly into interest rate hikes. Every indication since my initial prediction shows that this is the case.
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