Will History Record The Ending Of QE As An Archduke Moment?

Tyler Durden's picture

Authored by Mark St.Cyr,

One can’t help but look at the situations transpiring around the globe and hope: things are different this time. The problem is being different puts it right back in line with that other caveat: history doesn’t repeat itself, but it does rhyme. And so lies the most troubling aspect facing not only the U.S. economy, but quite possibly the world as whole. For if things rhyme anything inline with past events in history: We’re all in a dung heap of QE based minutia, with Geo-political ramifications the “intellectual” crowd never contemplated as possible – let alone probable.

It was just a mere 4 years ago this month in which then Fed. Chair Ben Bernanke announced to the world via his now infamous Jackson Hole speech that QE would basically be adulterating the financial markets indefinitely. i.e., QE1 became QE2 signaling QE4eva. And since that time the Federal Reserve has done just. And as always that decision was heralded by the financial media as “genius.”

And why wouldn’t they since this would now afford them a seemingly never-ending revolving set of happy faced hedge fund managers that could tell the world how they were just making a killing for their investors. Everything once again seemed just ducky. “Don’t fight the Fed.” again became the clarion call. However what most of these “wizards of smart” couldn’t read past their teleprompter is that the world may turn and fight them – literally.

The distortions in financial markets throughout the world have been breathtaking to anyone who’ll look using a thimble full of common sense. As the emerging markets became overheated and searched for ways to deal with hot money inflows wreaking havoc within their own markets. The Fed. and crew kept the pedal down, year, after year seemingly not giving any notion of care that others may retaliate in ways never contemplated by the intellectual crowd. i.e., War.

Just look at recent comments made by now Fed. Chair Janet Yellen in her most recent appearance before Congress as reported by ZeroHedge™: Yellen Warns Of Small Cap Bubble.  I read that headline and thought: Are you F’n kidding me?! I then took to the media channels to see if anyone called out that statement as proof the Fed. has no idea of what they are doing and counting on the media as to not point it out. It seemed I was correct for the silence was in fact – deafening.

If one thinks back to nearly every single testimony given as proof that QE was working you’ll recall Mr. Bernanke state, (I’m paraphrasing) “Just look at the Russell 2K.” Now suddenly a mere 5 months after his departure when the media et al gave his steady hand a sycophantic waving of goodbye, no one reports as to elaborate the glaringly obvious admittance by the new Fed. Chair? No one?

Revelations such as this along with the sheer unwillingness (or worse – incomprehension) of others to question such out right contradictory assessments must also be leaving others as slack-jawed as much as myself. But (and it’s a very big but) there are others that see such ineptitude, rudderless, contradiction in monetary, as well as political: as opportunity.

Nothing rallies a nation faster than the threat of an enemy. And nothing serves a political class born of dictators than using any and every tool at their disposal as to rally the glaring eyes of political unrest and affix it to another as to release their ire. And what better straw-man has the world offered the tyrannical powers of the world at large than the interventionist monetary policies of the Federal Reserve via their QE program.

Attach to this the mighty response as a “show of strength” in unison across the globe that sanctions along with freezing accounts is the openly decided upon tool more powerful than armies, or weapons.

To the multitude of uninformed as well of as misinformed people under these regimes. This is propaganda made to order in ways that even Goebbels would blush.

One can’t help but find the timing hauntingly coincidental that Vladimir Putin decided the window of opportunity to make his move on former parts of the Soviet Union was in near unison with the Fed. Revelations that in fact QE was being wound down. i.e., In February when the announcement of the 2nd $10 Billion dollar reduction made manifest that in fact the QE wind down was on schedule. (A schedule many across the financial media said wouldn’t happen.) Now economies such as Russia and others would find themselves once again at the center of any political unrest, while simultaneously being economically hamstrung screamed opportunity to use it to their advantage with Machiavelli inspired actions.

Tag onto this that other land mass with far more people to cast political upheaval than Putin has to contend with: China.

Suddenly the economy touted as “the” economy that will save us all is not only slowing, it’s contracting at a pace far more quickened as a direct result of QE being pulled.

One has to search far and deep to find just how bad and the frightening instability within their financial system that could take down world markets in a free fall under the right circumstances.

The issue here is these circumstances are not a million to one, they could be as high as 1 in 10. The U.S. “intelligentsia” seems absolutely oblivious to these facts or even the notion that such could transpire. Yet, suddenly that trading partner that every one of our so-called “smart crowd” regurgitates “they need us as more than we need them” is publicly taking the side, drawing up trade deals, and standing for photo ops with: Russia. Seems they have something in common suddenly don’t you think?

I marveled the other day when I found myself in a heated argument with others in respects to the events of today and how they’re playing out. Every time a point was brought about on how or why the circumstances along with the possibility for WWIII breaking out in earnest was met with sheer contempt, as if such things were ancient history.

Even when it was pointed out the display this past week by Soviet forces in assorted missile launches coupled with the now seemingly joined at the hip China sending in armed protection provoking retaliation or provocation in both U.S. friendly Japan and Vietnam territories: it was brushed aside.

Used as defense was the ludicrous notion that things like this aren’t as probable any more since economically we’re all dependent on each other as never before. That’s why the monetary policies since WWII has kept that type of balance in check. Personally I was left once again – mouth agape.

Even when the notion was interjected we could see a Bay Of Pigs styled replay at any given time, and that alone could bring on consequences no one has a clue about. Once again it was met as if all the powers that be are in fact “all-powerful” and can handle things with little to no disruption of any significance using , Greece, Spain, and even our own conflicts such as Iraq and more as validation.

I wonder how many besides myself felt quite unnerved when none other Iran was put back into the spotlight openly thumbing their nose in a way that Mussolini could identify with when none other than China publicly endorsed their relationship.

WWI began in earnest just about a month following the Archduke’s demise. Russia invaded Crimea in about the same time-frame. Couple with that the quickness of communist leaders publicly displaying solidarity reminiscent of events that transpired at the beginning of WWII. And the outright visible show of armament and the willingness to display it prominently under the noses of Western alliances suggestive of The Bay Of Pigs, and I guess there’s really no need for concern. After all we’ve got the latest and greatest deterrent the world has ever seen: #hashtags.