Thursday, 22 December 2016 03:47 Brandon Smith
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.
Peter is a Real Estate Broker at Professional Brokers Group (License No. 023000), covering the greater Short Sale area of Colorado.
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Peter Janisch specializes in short sales in Short Sale Realtor. I am your Short Sale Realtor Short Sale Specialist Realtor and Short Sale Realtor loan modification and distressed property expert. This article and content is for general informational purposes and may not be accurate. This should not be taken as legal advice, technical or tax advice under any circumstance. Seek legal advise and representation in all legal matters.