Many theories have been proposed as to why the Federal Reserve once again seems to be tightening their monetary policy, despite clear signs that the U.S. economy is weakening, and that several bubbles are the cusp of popping. Now, of course, this struggling economy, that is rife with bubbles, is largely a creation of the Federal Reserve in the first place, and is a side effect of keeping interest rates so low, for so long. Printing a few trillion dollars, in the form of QE, probably didn't help the problem either.
(Video form of this article is at the bottom, feel free to either read, or watch)
Yet, here we are. It would appear that we're at a point in this still young hiking cycle, that is comparable to 2007, right before the Great Recession began. It begs the question: Why is the Fed doing this? Why are they repeating the same mistake they've made so many times in the past? Some theories include:
-Partisanship: They were happy to have loose economic policy under Obama, but they are now looking to tighten their policy under Trump, and in turn, sabotage the economy as well as his presidency.
-Incompetence: They fail to see the full effects of their policy, both past, present, and future. Arrogance, Keynsianism, and stupidity have caused these policy blunders.
-Crash the System: The Fed wants to crash the system, in hopes of starting anew. This may take the form of a digital currency, a one world currency, or something along those lines.
Today, I want to propose a theory that I have yet to hear, from what I can remember. I believe that the Federal Reserve wants us to beg for mercy. What I mean by this, is that the Fed is following a blueprint that has been used time and time again by governments throughout history. This blueprint goes something like this:
-Create a problem
-Wait for the inevitable public outcry
-Propose a predetermined solution that also involves more government, as well as consolidation of power and money. These solutions also often allow for a certain industry to profit from the proposed solution.
The occupation of Afghanistan is an excellent example of this paradigm. In 2000, the Taliban instituted a ban on opium production. Though they were guilty of the practice in the past, they declared it un-Islamic. Not surprisingly, the ban was extremely effective, opium production plummeted. However, that all changed when the U.S. began operations in the country, in late 2001. In fact, in the last 15+ years, opium production has thrived in Afghanistan. Some of this may be the result of the Taliban growing opium, to fund their war effort against who they see as a foreign invader. Some of this production may be protected by the U.S. military. Regardless, it was a problem that was almost solved, until the U.S. got involved. This heroin epidemic is now as deadly as ever, and a good portion of those opiates originate in Afghanistan.
This epidemic has grabbed national headlines. People are angry, and rightfully so. This anger is the second stage, the public outcry. However, this anger over drug use has often lead to a push for harsher penalties, greater enforcement, etc. More often than not, these solutions are not originally proposed by the citizens. Rather, they are suggested by politicians, police chiefs, etc. Essentially, these solutions are predetermined. It's the third stage of this blueprint: predetermined solutions that also involves more government, as well as consolidation of power and money. These solutions also often allow for a certain industry to profit from the proposed solution. Who benefits from these solutions? The prison industrial complex would be the most obvious benefactor. Police departments across the country also benefit in the form of increased funding. And the cycle continues...
What does this all have to do with the Federal Reserve? Like I said, they want us to beg for mercy. I think there is a good possibility that the recent actions by the Fed, are an example of this three step program that I just outlined. The Federal Reserve creates a problem, in the form of out of control debt, bubbles in different assets, a weak currency, and an economy that is addicted to low interest rates and money printing. They have created a problem. Next, wait for the inevitable public outcry. Of course, this outcry doesn't happen until the economy takes a turn for the worse. The Great Recession is an example of this public outcry; I think during this coming downturn, we'll once again see this outcry occur. This is when the begging for mercy occurs. When bubbles begin to pop, GDP goes negative, and people begin to lose their jobs, mark my words: people will be angry. Only, most will not blame the Fed. They'll blame Congress, Trump, Obama, China, etc. Anyone, but the Fed.
Instead of getting angry with the Federal Reserve, people will begin to beg the Federal Reserve for mercy, like the hostages that we are. The Federal Reserve, in their infinite wisdom (sarc.), will lay out a series of predetermined solutions. These "solutions", will only perpetuate the problem. They will likely include:
-0% or negative Fed funds rate
-More quantitative easing than ever before
-”Helicopter money” (printing money, and giving it directly to citizens)
-Purchase of stocks, as well as possibly other assets (likely has occurred privately in the past)
-Government purchase and ownership of even more banks, financial institutions, and other large corporations (rather than allowing them to collapse)
-Further digitalization of currency (ban on large bills, similar to what was witnessed in India recently)
Of course, all of these "solutions" allow the Federal Reserve, as well as the top .01%, to consolidate more power and more wealth. Rather than allowing the system to fail, the system will try to correct itself. The central banks and central governments of the world will consolidate more power and more wealth. The citizens of the world will become even more dependent on government assistance. The economy will become sicker, like a drug addict whose life now consists of looking for the next hit, the next high. Eventually, it will collapse.
It's not too late to revolt. No, I'm not referring to a 1776 style revolution, we can leave that to others to discuss. What I am referring to, is a monetary revolution. The Federal Reserve and U.S. government's power is dependent on the Dollar. The U.S. Dollar, a fiat currency, enables this debt accumulation, runaway money printing, and a further centralization of power and wealth. Through monetary revolution, we can seize a small portion of this power. This revolution might consist of buying and owning cryptocurrencies; it might consist of silver and gold ownership. Likely, it will consist of both. By joining this monetary revolution, you can restore a small slice of power to yourself, and in turn, make the central governments of the world less powerful. Be your own central bank. Buy silver, buy gold, buy cryptos.
Feel free to watch the video as well:
(Image Sources:https://docs.google.com/document/d/1tSRwQerKU83tHUns8ZS-a6o3UXL3psOl2bk7fd3prGw/edit?usp=sharing)