December 18th, the President of the United States asked the Chairman of the Federal Reserve Bank to not hike interest rates. The president further specified that there isn’t a single compelling reason to raise interest rates, rather the overwhelming evidence is that rates are in fact higher than inflation warrants.
December 19th, the Chairman of the Federal Reserve Bank, Jerome Powell, increased rates and the market dropped 900 points. 900 POINTS!
What is truly disturbing is that during the press conference that followed he couldn’t justify in any coherent manner the reason for this gratuitous increase in rates and in fact contradicted himself with regularity. Mr. Powell went on to state numerous times that the FED’s goal is “inflation symmetrically around 2%” along with a neutral stance to maintain that equilibrium. The problem with this assertion is that he also stated quite categorically that this goal has not yet been met!! He actually said, “inflation continued to surprise to the downside.”
To her credit, Bloomberg News reporter Gina Smialek called him out on it and asked the obvious question “if you haven’t achieved 2% inflation… what’s the point of raising interest rates?” Mr. Powell Did Not Have an Answer.
When there are no valid economic reasons to the FED’s policies, then there is only one other explanation. The FED and Mr. Powell are acting out of political motivation. Before you jump on the “conspiracy bandwagon” consider that the four prior Democrat presidents were elected to their first terms in the midst of “manufactured” economic crisis.
JFK’s election came during the 1960-1961 recession which, quoting Wikipedia, “was” another primarily monetary recession that occurred after the Federal Reserve began raising interest rates in 1959.”
Jimmy Carter was elected in 1970 and of course the Nixon fiasco had a lot to do with it, but quite conveniently so did the 1969 -1970 recession. This recession “coincided with an attempt to start closing the budget deficits of the Vietnam War (fiscal tightening) and the Federal Reserve raising interest rates (monetary tightening ). Again we see the FED taking radical action just in time to affect the elections. It’s a pattern they’ll repeat many times.
George HW Bush’s loss to Clinton is in large part credited to the 1991 recession that was caused by congressional tax policy, which pushed the Savings and Loans industry over the cliff and into oblivion.
John McCain was up by 5% against Barack Obama, with only weeks to go in the election. The 2008 recession hit and he idiotically suspended his campaign to “participate” in the Wall Street bailout. Obama took advantage of McCain’s suspended campaign and jumped ahead in the polls, won the election, and the rest is history.
The economic collapse that magically coincided with the 2008 election was sparked by the refusal to bail out the infamous Lehman Brothers investment bank. There is no valid argument as to why Lehman was not bailed out. The argument that it would’ve been too expensive is laughable considering the insane amount of money the Obama administration doled out to banks and every other financial institution and many other companies during the subsequent years. To put in perspective Lehman’s ENTIRE mortgage portfolio was valued at $50 billion the same amount of money that Obama’s spent on his worthless “Shovel Ready” program alone! The cost of entire bail-out fiasco, banks, automotive etc. was many times higher !
So even if there is a question regarding whether or not Lehman should have been bailed out or some other measure should have been taken to ensure a more orderly unwinding of the firm’s portfolio, the timing is not in question. There is absolutely no natural financial reason why Lehman’s bankruptcy filing and the exodus of its investors could not have come after the election. Is there another compelling reason this all happened mid September 2008? Yes, and that reason is because that was the perfect time frame. It was early enough before the elections to allow for the market’s collapse to become part of the national consciousness and to be an overriding concern of the election. On the other hand, if it had happened say, a month earlier, the then president George W. Bush might have had enough time to take corrective action or McCain might’ve found a way to distance himself from it. Let’s keep in mind that president W Bush in effect abdicated his responsibility in administering the bail-out of the economy in favor of the two candidates McCain and Obama. Had the Lehman bankruptcy occurred a few weeks earlier then George W Bush would not have luxury to just say “no mas” but would have had to take steps to address the problems and perhaps, God forbid, find a solution. If it happened later by a week or so, then the public might not have had time to digest it and for it to become the overriding factor that it was. Let’s keep in mind that W signed Tarp on October 3rd. So mid-September was the right date to perpetuate a market collapse, not allow any time for a remedy and give Obama the victory.
What is striking about these recessions is that they seem to begin during election years and the “trigger” is an artificial act. In 1959, the Fed decided to raise the rates to a degree that took a healthy economy straight to a recession. Again in 1970, the Fed decided to raise rates right in the middle of the Vietnam budget deficit wind-down, nosediving the economy. In 1991, Congressional tax policy, mostly having to do with ending tax deductions for second homes, tanked the S&L’s and caused the recession. While it may be argued that the 2008 recession was inevitable, it remains clear that, at the very least, the timing was not inevitable.
Speaking of manipulating recession timing, it’s worth noting that the Clinton recession, commonly known as the “DotCom recession” did not “officially” start until George W Bush took office. It’s also worth noting that Bill Clinton’s vice president, Al Gore, was running on the Democrat ticket and was polling ahead of George W.Bush. A recession prior to the election would have put the kibosh on the Gore campaign. On the other hand, a recession that was “officially” recorded after the election could be and was hung successfully around George W Bush’s neck. No liberal media outlet ever explained what specific policies economic or otherwise President W. Bush enacted to cause the Dot.Com collapse and push the economy into recession. It simply became his recession becasue the media said so.
So why would the Fed raise rates now and tank the markets after the midterms election and a full two years prior to the presidential elections?
There are a few very compelling reasons, from the Democrats’ point of view, to take these drastic actions this early. Remember, the chairman of the Fed himself noted, there is no compelling economic reason to raise rates. So, we must look beyond economic reasons.
First of all, President’s Trump approval ratings are at historical highs and not showing any signs of errording. Not only that, but the left has seen that the usual tactics that they deploy to destroy a politician’s approval does not work with President Trump and it does not work with his supporters. Because of this, they probably feel that they need the full two years of bad economic news to make economics an issue in the upcoming election.
Second is the Democrats’ winning control of the House of Representatives. It’s no secret that the Democrats are dying to impeach President Trump. There is no legals reason to do that and, even if there was, impeachment will not be successful with a president who enjoys such high approval ratings. Crashing the economy is just another way to lower the President’s approval ratings and facilitate the impeachment. And this is no secret. Demented, America-hating, HBO host Bill Maher has even declared on multiple occasions “Bring on the recession” and admitted that the pain it would cause Americans is not something he’s concerned with. You see that’s the thing, liberals not only are not concerned with causing their citizens pain and anguish, they prefer it!
Third, this is a very strong economy, they need a prolonged period of unjustifiably high interest rates to tank it.
President Trump is absolutely correct in calling for Fed chair Jerome Powell to resign. By his own admission, Mr. Powell raised rates at a time when economic conditions do not warrant it. The reasons for his actions will be found in more sinister places.
Dismiss this as a conspiracy theory if you will, but no one can dismiss a two- month 5000 point market drop. No one can dismiss that this drop is due solely to the Fed’s rate hikes and no one can dismiss that the Federal Reserve Chairman Jerome Powell declared that there is no good reason to do any of this. The only plausible answer is that the Fed is trying to cause a recession.