The Fed Will Continue Tightening Until Everything Breaks

Wednesday, November 14, 2018
By Paul Martin

Brandon Smith
Alt-Market.com
Wednesday, 14 November 2018

Around three years ago, in September 2015, I wrote an article titled ‘The Real Reasons Why The Fed Will Hike Interest Rates‘ in which I predicted that the Federal Reserve, in the face of criticism, would soon pursue a program of interest rate hikes into economic weakness. I argued that this plan would be somewhat similar to what the Fed did in the early 1930’s; an action that prolonged the Great Depression for many more years. So far, my prediction has proven to be correct.

Despite the fact that the Fed keeps raising rates as it tightens the noose around the supposed economic “recovery”, there are still many people out there who refuse to accept that the central bank would deliberately implode the fiscal bubble that it has spent the last ten years inflating. Even today, I still see arguments proclaiming that the Fed will be forced to pull back if stocks fall beyond 15% to 20%. I also see claims that Fed officials like Jerome Powell had “better start looking for another job” because Donald Trump won’t be happy with Fed policies that could cause a crash. This is pure delusion from people who do not understand how the Fed operates.

First and foremost, let’s be clear, the Federal Reserve is an autonomous entity that does not answer to government oversight. It never has and it probably never will. This reality is supported by admissions by former Fed officials like Alan Greenspan, who publicly noted that the Fed answers to no one.

The central bank functions in quite the opposite capacity from what many people assume. As Carroll Quigley, prominent American historian and mentor to Bill Clinton, noted in his book Tragedy And Hope:

“The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank … sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.”

In other words, governments do not assert control over central banks; central banks assert control over governments. That said, there are some exceptions to this rule. For example, an act of Congress can be used to enforce a full audit of Fed activities, something which has never been done.

Fed propaganda asserts the lie that the bank is audited annually by the Government Accounting Office (GAO), but this is NOT an audit of Fed financial actions and policy initiatives. Rather, it is an audit of minor expenditures. Knowing how many pencils and desks the Fed purchases in a year does not help us to understand the bank’s influence over our economic security. All other audits of the Fed are done internally by the Fed’s own Board of Governors. This is hardly transparent or independent.

The only time the public has gained access to even a partial government audit of Fed activities was during the audit of TARP. This alone exposed trillions of dollars in bailouts and overnight loans to various banks and corporations, many of which were foreign.

The GAO did nothing in terms of regulatory action against the Fed after it was revealed that they were funneling trillions in capital into foreign corporations. All they did was make a ledger of the transactions, and remained silent on the rest.

I remind readers of this history and the conditions surrounding Fed actions because I want to drive the point home that, for now, the Fed and other central banks dictate the rules of the game. Some may say this has changed with the election of Donald Trump, but I disagree. If anything, as long as Trump is in office, the Fed will chase higher interest rates and steeper balance sheet cuts. They will not stop until markets break. And, the only solution (shutting down the Fed entirely) also comes with a set of extreme fiscal consequences.

There is a wall of cognitive dissonance when some in the public are confronted with this notion. They prefer to believe in a set of standard lies rather than accept that the Fed is a saboteur of our financial system. Here are those lies, listed in no particular order…

Lie #1: The Fed Is Unaware Of The Bubbles it Creates

The Rest…HERE

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