FEDERAL RESERVE’S TERMINAL PHASE FOR THE ECONOMY, AND THE MARKET.
By Gregory Mannarino
FEDERAL RESERVE’S TERMINAL PHASE FOR THE ECONOMY, AND THE MARKET.
By Gregory Mannarino TradersChoice.net
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FEDERAL RESERVE’S TERMINAL PHASE FOR THE ECONOMY, AND THE MARKET.
Status-Post the latest Federal Open Market Committee/FOMC meeting, (what a joke, “Federal”), which occurred on Wednesday September 18th, 2024, the US has been thrust into what will prove to be THE most economically destructive monetary policy phase of all time.
Let’s start with what began back in mid-June of this year. Unannounced, the Federal Reserve began an aggressive Quantitative Easing Cycle. This mechanism has caused, since that time, bond yields to CRATER. And as a direct result of this new unannounced QE cycle, interest rates here in the US have fallen to a near 2-year low. Moreover, the relative strength of the US dollar has also dropped SUBSTANTIALLY.
Quantitative Easing IS EMERGENCY MONETARY POLICY. QE is massively currency purchasing power negative and therefore QE is highly inflationary. QE is STRONGLY POSITIVE for the stock market.
Also, since June of this year, the Federal Reserve has engaged in FULL-ON Yield Curve Control, (YCC). Yield curve control is a “tool” used by central banks to manage interest rates across different maturities. Yield curve control is also stock market positive. Moreover, a “managed” yield curve creates an illusion of stability in the debt market. This illusion of stability in turn causes investors to put cash into risk assets/stocks.
On Wednesday September 18th, 2024, the Fed. Did something unprecedented. The Fed. cut rates by 50 basis points, and SIMULTANEOUSLY announced its plan to continue to aggressively cut rates not only for the rest of 2024, but also continuing to do so through 2025. What happened to the Fed. Being “data dependent?”
Obviously, despite the Fed. REPEATEDLY stating that they are data dependent, the Fed. IS NOT data dependent, and is instead on a fixed course.
The Fed., now having announced a fixed course to continue to cut rates for as far as the eye can see, (which also means they will continue their new aggressive QE cycle), has now given themselves carte blanche to create VAST amounts of cash OUT OF THIN AIR and therefore continue to monetize the debt ON A GRAND SCALE. A central bank monetizes the debt by buying government bonds. This monetization of the debt INCREASES the monetary base and allows ‘the government” to fund itself. (IT’S A PONZI SCHEME IN THE LITERAL SENSE).
What the Federal Reserve is engaging in today, is a deliberate and highly destructive monetary policy phase, possibly their end stage, and as is always the case- WE THE PEOPLE will pay a terrible price for it.
Lions… IF YOU HAVEN’T YET!
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Greg, the question is simple, "what are the intentions of the Elites?" It seems that the not so '"FEDERAL" BANK is being used by the Elites to amass vast fortunes by having access to very cheap money. The cheap money is used to buy back stocks to control corporations, buy most of the real estate (Black Rock) and to lobby Congress' 538 members, buy gold and now also to control the highly speculative block chain coins. Little wonder that the wealth gap is getting wider and wider. This is history repeating! It happened to Rome, USSR, Weimar Republic, the former Monarchies, the Dutch, Spain etc. We are in a very dangerous period. Something has to be done!