Tell government officials and central bankers they can manufacture credit without negative consequences to the officials or central bankers and wonder of wonders, they’ll manufacture money. Such has been US economic policy since Nixon closed the gold window in 1971. The question is whether the negatives have been eliminated or merely delayed. SLL and Bill Bonner believe the latter. From Bonner at bonnerandpartners.com:
BALTIMORE, MARYLAND – When the money goes, everything goes. Last week brought more evidence.
America’s late, crony capitalist empire is sinking into corruption, incompetence, and debt.
But first, a bold prediction…
You’ll recall that we predicted that the Federal Reserve would never “normalize” interest rates. Well, the Fed never even came close. And now it’s once again doing all it can to inflate the nation’s money system.
Last week, we learned that it would add about half a trillion new dollars over the next four weeks. Funding the short-term lending markets with that kind of cash suggests to us that other lenders – big banks – don’t want to put their own money at risk. Clearly, the Fed is desperately trying to stop something from happening. What it is, exactly, we don’t know.
Meanwhile, another of our predictions was confirmed last week: the Trump team announced a major trade deal with the Chinese. In other words, it did not go “Full Retard” yesterday, as scheduled, with additional tariffs.
Trump has an election to win. The trade war may have brought smiles to his base of supporters a year ago. Now, it threatens to cost him votes. He had to settle… on almost any terms.