Federal Reserve Initiates End Game As Trump Heads To White House

Tyler Durden's picture

Submitted by Brandon Smith via Alt-Market.com,

For years, alternative economic analysts have been warning that the “miraculous” rise in U.S. stock markets has been the symptom of wider central bank intervention and that this will result in dire future consequences. We have heard endless lies and rationalizations as to why this could not be so, and why the U.S. “recovery” is real.  At the beginning of 2016, the former head of the Dallas branch of the Federal Reserve crushed all the skeptics and vindicated our position in an interview with CNBC where he stated:

“What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.It’s sort of what I call the “reverse Whimpy factor” — give me two hamburgers today for one tomorrow. I’m not surprised that almost every index you can look at … was down significantly.” [Referring to the results in the stock market after the Fed raised rates in December.]

Fisher continued his warning (though his predictions in my view are wildly conservative or deliberately muted):

“…I was warning my colleagues, “Don’t go wobbly if we have a 10-20 percent correction at some point. … Everybody you talk to … has been warning that these markets are heavily priced.”

Here is the issue stocks are a mostly meaningless factor when considering the economic health of a nation. Equities are a casino based on nothing but the luck of the draw when it comes to news headlines, central banker statements and algorithmic computers. Today, as Fischer openly admitted, stocks are a purely manipulated indicator representing nothing but the amount of stimulus central banks are willing to pour into them through various channels.

Even with the incredible monetary support pooled together by international financiers, returns on equities investments continue to remain mostly flat.  It would seem that the propping up of indexes like the Dow has been only for the sake of keeping up appearances. For many people, revenue is barely being generated.

Unfortunately, the majority of Americans do not care to educate themselves on the finer points of finance. Their only relation to the health of the economy is their daily glance at the Dow. If it is green, or at all time highs, they assume that all is well, even if their gut is telling them something is not quite right.

The elites that stand at the helm of the Federal Reserve understand this dynamic very well. They are not stupid. They know that the whole of the global economy could be in a shambles but as long as stocks remain positive the masses will continue to ignore reality until the flames of destabilization are at their very doorsteps.

With this fact in mind one might think that the Fed would consider it in their best interest to keep stimulus measures operating indefinitely; but that is not what they are doing.

In fact, the Fed along with other central banks like the ECB has been slowly peeling back pillars of support from markets that have been in place since 2008-2009 and leaving the system open to a crisis event that should have been dealt with years ago. I examined this process of deliberate destabilization in my article 'The Global Economic Reset Has Begun.'

In that piece I outlined the three major pillars holding up the U.S. market system and certain parts of our economy and how they were being systematically removed.

The first pillar was the use of bailouts and quantitative easing measures. These were diminished through the implementation of the Fed “taper,” which I predicted would happen three months prior that year.

The second pillar was the use of near zero interest rates, which allowed numerous banks and corporations to access low-cost and no-cost overnight loans from the Fed. These companies then used these loans in large part to support a never-ending program of stock buybacks, which reduced the stock pool and artificially boosted the values of the remaining stocks.  I predicted in August of 2015 that the Fed would hike interest rates and that this would be the beginning of the end for the stock buyback bonanza. The Fed hiked rates in December of that year.

This process of removing backdoor manipulation through low interest rates should be our main concern right now. Early in 2016 I believed that the Fed would reach a position in which it would finally unleash a series of rate hikes. I did not think they would be so blatant as to wait until right after the U.S. presidential election to do so. I was wrong.

This is why I eventually predicted the launch of a series of rate hikes starting right after the election of Donald Trump in my article 'World Suffers From Trump Shell Shock  Here’s What Will Happen Next.' The Fed has now once again hiked interest rates with assertions that they will be “accelerating” such hikes throughout 2017.

As I have been arguing for most of the past year, the election of Donald Trump was inevitable and would precede the triggering of the final stage of our ongoing economic crisis. I came to realize that the Fed’s timing of their latest rate hike is highly strategic. Not only does it set the stage for a series of hikes that will crush U.S. stock markets this coming year and finally shock the public out of their fiscal stupor, but it also maneuvers the crisis right into the lap of Donald Trump and the conservative movements that support him.

Beyond this, it perpetuates an increasing Left/Right division in America. Think about it  during a fiscal crisis under Trump, tiggered by accumulating Fed rate hikes, liberals will immediately set upon Trump as the culprit, while conservatives will immediately defend Trump as a victim of Federal Reserve meddling.

The Federal Reserve and the mainstream media are already composing the narrative by stating that Trump's potential economic policies and a widening budget deficit would REQUIRE higher rates at a faster pace in order to be accommodated.

I have heard arguments from some that this tactic would simply not work. That people would “never buy” a narrative in which Trump and conservatives are blamed for a market collapse that was at least eight years in the making. I have to say, this view is incredibly naive.

I understand why people would want to embrace the notion that the public is as savvy as the liberty movement when looking at economic events, but this simply isn’t reality. A large portion of the U.S. population identifies with the “Left” end of the political spectrum. We have already seen how they react in the face of a Trump election win. They are predisposed to believe that Trump is responsible for a market crash regardless of the facts. Not to mention, much of the rest of the world is economically ignorant and will likely jump on the anti-conservative bandwagon during a crisis as well.

But the real master stroke of this strategy on the part of the elites is that it creates the perfect platform for the destruction of the U.S. dollar’s world reserve status  the third and final pillar I mentioned months ago that is supporting our economic system.

Imagine that the Fed’s rate hike frenzy sparks an open feud between the central bank and Trump? Some people might say “Good! Shut the bastards down!” However, this is exactly what the elites want. With the Fed “at odds” with the president of the U.S., faith in the U.S. dollar will plummet. Its world reserve status will be destroyed. And instead of being blamed on central banks, the majority of people around the world will claim it was the fault of Trump.

With a historically sufficient excuse for the end of dollar dominance in hand, the elites can move forward with their great global reset, which includes the replacement of the dollar with the IMF’s special drawing rights as the go-to reserve currency mechanism. The SDR basket is an essential bridge in the formation of a single global monetary authority and a true single global currency.

I believe that the Fed will not only continue hiking interest rates throughout 2017, but that some of these rate hikes may be LARGER than many people expect (50 basis points or more). I believe this will be designed to foster extreme tensions between the executive branch and the central bank.

A few months ago I would have said that Trump may or “may not” be aware of this dynamic and the potential that he is a scapegoat. Now that I have seen Trump’s cabinet picks which include neo-con and Goldman Sachs alumni, I have little doubt that he is fully cognizant of the plan.  I will be writing more on the issue of Trump as a "Trojan horse" in my next article.  In the meantime I would point out that all of the elements of psychological support for stock markets will also disappear in the face of a Trump verses establishment narrative.

All those leftist media outlets cherry picking economic stats and telling half truths to support the recovery lie now have no reason to continue cheerleading for the economy. I expect that propaganda rags like Reuters and Bloomberg will quickly change their tune with Trump in the Oval Office and begin a consistent chorus of negative financial data. Not only will the Fed remove all support from the system, but the mainstream media will be pounding day traders with the kind of “doom and gloom” headlines that they have been criticizing us for over the years.

Make no mistake, the election of Trump may have some in the liberty movement ready to pack up their preps and forget about any national crisis in their lifetimes, but the truth is, vigilance is needed now more than ever. I said it before the election and I’ll say it today  do not get comfortable; the times are about to get even more interesting.

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nmewn's picture

Been waiting eight years for this...

"Oh sure, leave a big ass mess for the white guy to clean up!"

...how does it feel progs? ;-)

King Tut's picture
King Tut (not verified) nmewn Dec 22, 2016 11:25 PM

8 years? Try at least 30.

nmewn's picture

1913...war & welfare.

And federal pensions to boot! ;-)

TBT or not TBT's picture

i thought this was the Fed's Operation Credibility.  

07564111's picture

Is this the moment they 'Kill The Dollar' ?

Jackagain's picture

If they wanted to kill their precious $ they would issue QE again instead of raising interest rates. Of course they don't mind killing the market instead while Trump is in office...

J S Bach's picture

I have to admit... deep inside, I hope this happens.  The inevitable fail of debt-based-usury-fiat-currency is a given.  The quicker it comes, the quicker a solution.  No sitting President, however, wants this to happen during his term.  It implies devastating consequences to the economy and public opinion.  So they think.

With the advent of social media (which Trump has proved very adept at facilitating)... the truth can - and MUST - be told.  I pray that when this inevitable (((vengeful))) scenario occurs, Trump will give as brisk and simple an account as to the reality of the situation.  When the whole house of fake-dollars falls, there must be an instant and honest alternative.  We all know what that is.

Uchtdorf's picture

Trump is complicit. The elite president has chosen elites to join him in the Cabinet and his administration. Trump's tweets will take on an air of Big Brother a la 1984.

wee-weed up's picture

Yep, no doubt Obozo has instructed Witch Janet to release her harpies to do maximum damage to the Trump Presidency...

Escrava Isaura's picture

The owners of this nation CAN NOT liquidate (crash/pull the plug) because there’s no way to re-grow it. Also, most likely, they will be facing a revolution/civil war that could become uncontrollable.

There will be financial engineering (QE and all other kinds of skims) as long as they can master it. Their goal at the moment is to liquidate the small banks, and some nations as well, so the money flows to Wall Street.

 

DownWithYogaPants's picture

I would advise Trump to at least feign a move to United States Notes to replace Federal Reserve Notes.

That'll put the fear of god into them.

agstacks's picture

That move would end his life.

Save_America1st's picture

the article has all valid points...and I think Mr. T. is well aware of this scenario for sure.

What would be a classic move would be for Trump to make a speech to the nation right away in January front-running the Fed-scum outlining these scenarios before they can make a move.  Then in the speech announce that 'ol Yellen will be removed and Ron Paul will be taking her place.

Then put pressure on the CON-gress critters to end the Fed before they can launch their plans, and then have the Treasury take over control of the monetary system again w/ a new gold-backed dollar.

And that would also be the fucking end to the Fed's private goon-squad known as the IRS.

Damn, that would be so kick ass ;-)

 

r3phl0x's picture

They won't take it all the way down. Just another 40-60% so they can invest their massive cash reserves at a "fair price", before resuming ZIRP plus QEwhatever plus whatever new shit they come up with to reinflate to another ATH in the equity and housing markets a few years later. Far from "smoothing the business cycle" they are intentionally engineering extreme highs and extreme lows every 5-10 years, frontrunning their own actions to maximize personal wealth.

weburke's picture

to get to a global currency in 2017 as predicted by the economist, you raise rates til the world runs to the imf for rescue, with one world order terms of course, and then you collapse the us, and the imf rescues the us. trump I am guessing, is just there to keep american men volunteering to join the new world order military. ie, the alleged us military.

weburke's picture

but a short term stock market skyrocket is my bet. cvs for one. 

iLLivaniLLi's picture

If they were planning on using the military in the near future they wouldn't have purged it of so much aryan top brass and invited in so many affirmative action hires.

I'm Broke AF's picture

This article is all bullshit. They're not going to pull the plug simply because Trump "won" the election. If they didn't want him to win the election, they would have made sure that he doesn't. They want Trump in office because he gives the appeal of caring for fly over America. Truth is, Trump is in bed with Yellen. They both want rampant inflation, Trump has himself stated that he would prefer to default on US debt if needed. Your valiant guard in white and shining armor is nothing but a wolf in sheep clothing. The Fed bluffed in 2016 about their rate hikes, I'm willing to bet they're bluffing again.

TeamDepends's picture

The debt can never be repaid, so why pretend? Foreclose on the ones who got us here, liquidate their assets and distribute them evenly to those who have worked hard/paid in. This is not communism, it is a one time removal of the parasite.

All_Your_Base's picture

I would like to hear more about how that would work exactly.

Isn't saying, "the debt can never be repaid," like saying the asset can never be possessed? Those who have worked hard would be fortunate to keep their private stockpiles, while what was "paid in" would be erased when the "debt" was erased, no?

fairhill2's picture

 The US is a Sovereign country with its own currency.It can never run out of money and can always pay, any and every debt, by the simple expedient of printing more dollars.

Of course the end result will be inflation and a loss of confidence in the dollar. But this game can go on for a very long time. Debt does not matter and deficits do not matter, when you have your own currency. What matters is where the money is spent. Military adventures do not add to a nations wealth.Investment in infrastructure and productive Industry do.  Industry creates wealth and jobs. Employment  is the key to a successful economy.People have money to spend and it is a virtuos cycle.

Financial chicanery does not create wealth and is a burden on Industry, by way of compond interest.It is actually a negative on GDP growth. We need more Industry and less Finance.

r3phl0x's picture

Low-tech labor-intensive manufacturing industries are not coming back - period. The US still has the best high-technology sector in the world, but that's about it, and even that's eroding pretty quickly to South Korea, Taiwan, China and (to a lesser extent) India as senior managers at US tech firms all decided in the mid-90s to give away the golden fruits of 50 years of US science & technology to those nations in the pursuit of lower labor cost. That was perhaps the largest, most disastrous transfer of intellectual wealth in history, but hey, at least it boosted quarterly earnings for a while.

fairhill2's picture

 The US is a Sovereign country with its own currency.It can never run out of money and can always pay, any and every debt, by the simple expedient of printing more dollars.

Of course the end result will be inflation and a loss of confidence in the dollar. But this game can go on for a very long time. Debt does not matter and deficits do not matter, when you have your own currency. What matters is where the money is spent. Military adventures do not add to a nations wealth.Investment in infrastructure and productive Industry do.  Industry creates wealth and jobs. Employment  is the key to a successful economy.People have money to spend and it is a virtuos cycle.

Financial chicanery does not create wealth and is a burden on Industry, by way of compound interest.It is actually a negative on GDP growth. We need more Industry and less Finance.

Cistercian's picture

I initially thought TPTB were cynical to have a blackman be responsible for the systemic crash.

I guess I was correct.

Which sucks as usual.

wet_nurse's picture

If only Trump had something to draw attention to the past administration to prove they are the enemy in the event of fiscal meltdown....oh wait, pizzagate 

froze25's picture

Sheriff Joe proving that Obama's birth certificate is a complete fraud and that multiple felonies were committed by presenting it as authentic doesn't hurt either. https://youtu.be/e-1KxhJK_6o this should be shared.

sun tzu's picture

Hang the banking cabal with piano wire

07564111's picture

we came, we saw, they died.

HedgeJunkie's picture

Fuck you.

"What difference, at this point, does it matter?!"

Doña K's picture

The bankers maybe, just maybe, are ready to change allegiance as the crash will be too big for the FED to survive in its current form.

Thus, they and Trump will be viewed as the saviors of FED's arrogance and stupidity.

Nonetheless, a crash is coming and hubby and I are loading the shorts starting January 2nd.

King Tut's picture
King Tut (not verified) Dec 22, 2016 11:24 PM

DJIA @ 20K tomorrow to give the plebs some confidence for that last minute Christmas buying push

We Are The Priests's picture

With the Banksters favoring weekends for unleashing economic hell, you have to wonder about the weekend following the inauguration.  It might seem a little obvious to pull it that quickly but, frankly my dear, I don't think they give a damn.

mosfet's picture

I hope I'm wrong but suspect the Fed will hold the DOW under 20K til after the New Year, and then push it way up above 20K during the 1st week of January to try and convince everyone there wasn't anything to worry about.  So my guesstimate is that a sell-off starts in Feb instead.  I try to stay cognisant that the Fed's always frontrunning any predictible cirsis or sell-off - it's the one's they don't see coming that they can't artifically manipulate indexes in advance of.

Tall Tom's picture

 

 

 

FWIW...People are not selling stocks now in anticipation of the Trump Capital Gains Tax cut.

 

Thus dwindling supply offered for sale keeps stock prices artificially elevated.

 

Adding to that people are wanting to reinvest their capital into what they previously did sell, in this current quarter, in order to avoid paying an unnecessary Capital Gains Tax that they'd have to pay for 2016. Thus there is also that factor on the demand side which causes the price to increase even more.

 

After the New Year holiday I will expect to see a massive sell off of this overvalued Market...especially when disappointing Retail Sales data emerges.

 

Hedge accordingly and short this Market.

 

Real Estate is also set to tank because of the 100% increase in the Ten Year Note (1.3% to 2.6%) and the subsequent increase in the rate of foreclosures due to the creative financing of Adjustible Rate Mortgages.

 

It is not about Yellen's jawboning of Interest Rate hikes. That has ALREADY HAPPENED and Yellen has no real control. Whoopee! She raises the overnight by 25 basis points. But the Derivatives Market is coupled to the Ten Year Note.  The Fed has lost control.

 

So US Debt is set to soar as Trump cuts taxes and Interest Rates increase.

 

And since Trump is intent in starting a Trade War with China then the USA will have nobody to whom to export the consequential Monetary Inflation that results as a cretion of that debt.

 

So we will see record and stunning Price Indlation domestically and we get to repeat the late 1970s and early 1980 once again...

 

Hell-O STAGFLATION!!!

 

Yes. It is lookin' as if 2017 will be a year for the record books. I am looking forward to the collapse. May it cause the total destruction of this corrupted paradigm.

 

This cannot be a better set up.

 

Happy Holidays as this may be our last.

HedgeJunkie's picture

Tonight I spent $3,600 on a gold ring and earrings , both with diamonds (streeing more than 1 diamond, wife wanted diamondS).  Put it on a credit card that is insured against theft loss.

 

There's going to be hell in my neighborhood on 12/26.

flaminratzazz's picture

when this sumbiatch collapses it's going to knock a hole in the basement that you wont believe

detached.amusement's picture

no way, that bathtub is built real strong-like, the WTC falling in it couldnt even crack it

 

/s

Seasmoke's picture

If Trump has learned anything from Putin. It should be,not to fall into The Tribes trap.

GRDguy's picture

The real problem is that Trump would not exist if it was not for the Tribe.

Who do you think loaned him those millions?  Deutsche Bank is just ONE of them.

https://www.bloomberg.com/news/articles/2016-12-22/deutsche-bank-s-rewor...

We Are The Priests's picture

Spot on.  I'm doubling up on my monthly prep allocations now that Trump--short of an assasination...uh...um...act of God--is assured to be sworn in.  The only thing that's been holding the NWO back from pulling the plug is lack of a plausible cover.  Well, now they have it.

JackT's picture

An entity that wants to rule the world doesn't care about a popularity contest. Doesn't matter who holds the bag, they pull it when they decide. They know the consequences regardless of public opinion.

Publicus_Reanimated's picture

The author assumes the globalist Left's narrative will fly.  I beg to differ.

The difference between Trump the candidate and President Trump is the president is the master of the executive branch.  All your data belong to me.  Every fucking bit and byte of it.  I own all your e-mails and your "for official use only" memos.  Do you really think Trump will let this bullshit go unchallenged, especially now that he has access to all the information that can exonerate him?

HedgeJunkie's picture

As someone said once before, about six years ago...

Once in office his first briefing will be who really shot Kennedy, with government, state of the art, video to bring it close to home. 

I cheerlead, but I know that our side is about 40% of the ignorant.  And 75% of the ignorant wil put fingers in their ears and yell "LA LA LA LA" as a personal sound track while avoiding anything that challenges their indoctrinated viewpoints.

SgtShaftoe's picture

If the fed takes a political angle to torpedo trump, expect trump to hit the Fed with a 50 Megaton nuke.  That is, if he doesn't alienate all his support in the coming weeks from the appointment of goldman criminal trash.  Then the "nuke" will be later and bigger sent from the entire flyover country.  It could result in a siege on DC, etc. Choose your own adventure. 

Wilcox1's picture

There are some decision makers in this world. There are some decisions that need to fall into their lap. It is the US(A) / Donald Trump Conservative Decision Makers who will decide the best for all.

Kprime's picture

I love the smell of pensions burning in the winter air.

onmail1's picture

Learning from Japan
Its called Masterbationomics

Jackagain's picture

This is why Trump has his own non-governmental security team. (Remember when JFK relied on Secret Service agents?)

http://www.politico.com/story/2016/12/donald-trump-security-force-232797

http://nymag.com/daily/intelligencer/2016/12/trump-likely-to-retain-a-pr...

cantscratchfever's picture

Well TD I do not think Trump is as powerless as you think. The whole thing that BO did with evecutive orders ...NDAA all this exploitation of the Terrorist Histeria that followed 911. The executive orders that have been put into place by the previous 4 administrations. Do in fact give the president broad powers to deal with any economic crisis.

Now all he has to do as interest rates start to rise, is he audit's the FED

Pulls all the bankers of the 12 fed banks nation wide, along with the whole board of governers of the treasury. All the largest shareholders of the federal reserve.

Explains to them the fact that since 1913 the federal reserve has been loaning the US Government the money to run the government with interest.

they have not paid one dime in Tax on that money.

He then informs them that the fed will in fact sell the rights to coin our currency back for 450 million dollars. I believe that this is in the federal reserve act of 1913.

Then he tells them that they will either pay back the national debt or they will spend the rest of their lives in prison breaking big rocks into little rock 12 hrs a day 7 days a week.

You know what the plan is after the collapse they were going to introduce the PHEONIX world currency. But that was with their man in the office ahem er woman. Trump winning the presidency was the end of their plan , Trump after this scenario will simply have to issue a new US DOLLAR