Gold Will Rise Even If The Fed Doesn’t Cut Interest Rates…”We are in a recessionary crash right now.”

Tuesday, July 9, 2019
By Paul Martin

Brandon Smith
Monday, 08 July 2019

There has been much speculation lately on the Federal Reserve and its ongoing tightening policy. If you were to only read mainstream economic news you would think the Fed had already reversed course and “capitulated”, but this is not the case. The Fed continues to hold interest rates at their neutral rate of inflation while also moving forward with asset dumps from their balance sheet. Nothing has changed since December/January when the Fed first made minor changes to its public statements hinting at “accommodation”.

By leaving such wording completely ambiguous and refraining from any specifics, the central bank has allowed the media and the investment world to assume that the phrase changes can mean whatever they want the changes to mean. In other words, the Fed has bamboozled the mainstream into projecting their own fantasy outcome. Meaning, they believe that the outcome they desperately want (near zero interest rates and QE4) is the outcome they are going to get. Not only that, but they also think they are going to get it all very soon.

In the alternative economic media, I have noticed that there is also a presumption that the Fed will revert back to stimulus measures at any given moment. In fact, I have heard predictions of Fed rate cuts every month for at least the past seven months. And, each time the Fed doesn’t cut rates, the same analysts argue that “this time was close and next month is certain.”

To be fair, many analysts are basing their assumptions partly on the current financial reality. They are aware of factors that the average person is mostly oblivious to. Even now in the wake of swift declines in almost every sector of the economy there are still economists and portions of the public arguing that we are in the midst of an economic renaissance. Those people predicting a Fed rate cut in the near term know better.

They see major indicators like the housing market suffering from a 7.8% overall drop in sales and an 8.1% drop in prices.

They see auto market sales at the slowest pace in four years as interest rates rise on auto loans.

They see historic levels of consumer debt and corporate debt. They see massive retail closures (more than 7100 closures announced so far this year), a grinding halt to shipping and freight, seven-year lows in Global manufacturing PMI, the weakest U.S. manufacturing PMI since 2009, and a three month running inversion in the treasury yield curve, etc.

All of these factors signal a violent drop in global and U.S. demand, while the squeeze in dollar denominated assets globally signals that the Fed is indeed tightening liquidity as it said it was doing. Only a fool or a liar would argue in the face of these facts that the economy is in “recovery”. We are in a recessionary crash right now.

In a world without agendas, the Fed would have openly admitted that all of this is going on and that they created this mess through ten years of unprecedented inflationary measures followed by rate hikes and policy tightening into ongoing economic weakness. Then again, in a world without agendas the Federal Reserve would not exist.

As Jerome Powell recently reiterated in his statements to the Council On Foreign Relations, the Fed continues to make false claims that U.S. economic growth remains “strong”, and that while they will be watching for “crosscurrents” (and blaming the trade war for the economic stagnation they created), they do not intend to let “short term swings in sentiment” push them into any policy changes to the Fed funds rate.

Translation: The Fed is not going to stop policy tightening until the crash has hit its peak. This is a classic central bank modus operandi. The Fed’s last policy statements indicate no rate cuts until well into the year 2020.

The Rest…HERE

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