financial world is entering a massive process of transition though most folks
have failed to see it. That process is that of Ben Bernanke being forced to
resign and the US Federal Reserve being broken up.
I know many
people believe the Fed is always going to be in power, but they are wrong. The
US Federal Reserve is in fact the third central bank the US has had. And it,
like the other two, will be dismantled in the next five years.
for this is quite simple. The REAL Crisis (of which 2008 was the warm-up) is
fast approaching. When I say REAL Crisis I mean full-scale systemic meltdown, a
situation in which the market accomplishes what the Fed, regulators, and US
Government at large have failed to do: clean house.
facts are right in front of us. The US is broke on every level: Federal, State,
Local, and individual/ consumer. We all know this, but we don’t want to admit
it because doing so would likely mean wiping out at minimum 30% of what we have
this. Consumers don’t want to lose their retirement accounts or their savings.
The Government doesn’t want to lose its unending virtual checkbook. Politicians
don’t want to lose their financial backers (the oligarchs). And the Fed
certainly doesn’t want to lose its massive Free Lunch.
is clear to everyone that the system is broken. Consider that the very policies
that Wall Street developed resulting in the 2008 meltdown (excessive debt,
fraud, too much leverage, etc) are now being applied to the Federal balance
Fed’s response to the Financial Crisis was to do the exact same things Wall
reason it worked for a time was because investors continue to believe that the
Fed is some kind of omnipotent financial authority that can take on all debts
and back up all monetary transactions. The reason they’re willing to believe
this is because not doing so would result in the collapse I referred to before.
To use a
metaphor, if your house has a broken foundation (the financial system), you can
prop it up using various structures (the Fed). However, eventually the
foundation gives way regardless of the support.
already seeing this happen in Europe. The Euro is up but the entire European
system is broken. No one wants to be a part of it any more. Only the
politicians and bankers are trying to keep it together (largely because they
don’t want to lose their influence).
elections in Germany are making it clear voters will obliterate anyone who is
pro bailouts. As a result of this, the tide is turning. Large-scale reform and
changes can take a while which is why the process seems to be occurring in slow
process is occurring. And nothing can
stop it. You can fight the tide tooth and nail, but it will turn regardless of
situation will hit in the US in the future. I’ve already detailed why the US Dollar is holding up (it’s
priced against other paper currencies) despite the fact an exodus from the
greenback is occurring.
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