My last post covered the absolute necessity for the US to maintain low interest rates to withstand economic collapse. With the markets still in turmoil (Dow is down over 500 points as of today), I wanted to reflect on an older post from last year titled 'Donald Trump Will End The FED And Move US Toward The Gold Standard'. The rise of cryptocurrencies likely replaces the possibility of a gold standard. But, in the event that bond yields do rise and the market crashes, the Federal Reserve (FED) is being set up to take the blame. This is how things could play out:
I believe Mr. Trump will try to push through all of his economic programs on the assumption that the Federal Reserve will keep interest rates low and continue to print massive amounts of dollars as needed (they did it for Obama, right). If the Federal Reserve obliges then great - infrastructure is restored, the military is strengthened, taxes are cut - all with printed dollars at no cost and limited inflation!! Well, unfortunately, there is virtually ZERO chance of this happening. China will no longer be allowed to provide short term support at the expense of losing strategic assets (see here). The massive size of the federal debt (see here) and ongoing deficits will make these policies impossible to implement. Which brings us to Plan B (which is really the only plan) - Blame the Federal Reserve. Trump can say he tried to get his plan through but didn't get the support of the Federal Reserve. He can then claim that we need a 'new system' in place. That is where some kind of gold standard will come into play. So, what happens if there is some kind of major financial crisis (i.e. Deutsche Bank, Chinese banks, etc) during his term. Same thing - Blame the Federal Reserve. Do you really think Donald Trump is going to protect the banks that he ran against??
Trump: “Hillary Meets In Secret With International Banks To Plot Destruction Of US Sovereignty” - Infowars, October 14, 2016
'The Clinton regime is at the center of this power structure. We have seen this first hand in the Wikileaks document in which Hillary Clinton meets in secret with international banks to plot the destruction of U.S. sovereignty in order to enrich these global financial powers, her special interest friends and her donors.Take a look at what is going on. They have stripped away these towns bare and rated the wealth for themselves and taken our jobs away, out of our country, never to to return unless I am elected president.'
What Mr. Trump will do to the Federal Reserve (assuming he is not assassinated) is the same thing he did to the mainstream media, to the CIA and others. He gives them the rope to hang themselves. He stakes out a position, remains firm and watches his opponent make fools of themselves trying to undermine him.