Updates on familiar themes from Brandon Smith. The long-predicted crash that will bring down the global economy has become. He may be right. From Smith at alt-market.com:
This past week’s events have sent the economic world into a tailspin. Mainstream analysts were so sure of themselves heading into the July Federal Reserve meeting – The Fed was going to cut rates by a respectable margin, or they were going to cut incrementally and promise the markets through thinly veiled language that QE4 was well on the way. This was supposed to be a certainty.
They did not get what they were hoping for, but I don’t think many people understand why the Fed did what they did.
I have long held that the Fed has no intention of kicking the can on the economic crash that is currently underway, and that the Fed’s tightening cycle was a way to restrict liquidity into economic weakness in order to trigger the collapse of the “Everything Bubble”. I predicted over the past two years that the Fed would keep liquidity conditions tight until right before or right after an accelerated crash in fundamentals and markets. The crash in fundamentals has already begun in 2018 and 2019. A return to incremental crash conditions in stock markets has also now likely started.
While I believed the central bank would hold rates steady in July, Jerome Powell’s public statements after the Fed announcement of a minor .25 bps rate cut were even worse for market investors to hear and only support my original position. Powell’s assertion that the cut was merely a mid-year “adjustment” and not the beginning of an easing cycle horrified the investment world. Powell was telling markets quite bluntly that the punch bowl was not coming back anytime soon. On top of this, St. Louis Fed president James Bullard refused to commit to any further interest rate adjustments this year, citing a “wait and see” approach, which could take many months. Once again, Fed officials are making it clear that expectations for a stimulus bonanza are naive.
The consensus seems to be that the Fed has offered “too little too late”, and I would say that this is a completely deliberate action. Frankly, there was nothing holding the Fed back from a cut of .50 bps and lavishing the financial media with images of QE heaven. Trump says he wants it, the daytrading world is begging for it, and central bankers rarely shy away from more money printing. Unless, of course, the banking elites WANT a crash to happen in the near term, that is.