Hey There Income Hunters,
Jerome Powell’s first term at the Fed expires in February and opposition to bringing him back for another four years is rising.
That’s right, they might taper J-Pow!
Bypassing Powell for Lael Brainard, a Democrat and the most likely successor, would have massive implications for the markets …
You see, opposition to Powell stems from the fact that he has eased many bank regulations that were put in place after the 2008 financial crisis.
And I have been vocal about my own displeasure with how the Fed has handled banks.
The Fed acts as a supposed regulator, yet it has historically turned a blind eye to banks’ lack of fiduciary responsibility to clients.
A prime example is the financial crisis of 2008, when the banks deceived their clients by selling them subprime mortgages knowing they were likely to default. The Fed stepped in to bail banks out when they started losing money while investors suffered for years.
This chart is stunning:
Privatize Profits and Socialize Losses
It’s a disgrace how the banks took advantage of hard working Americans knowing the Fed would always have their back if bleep hit the fan …
Americans got crushed during the 2008 crisis and never recovered. while the banks made money and have been raking in profits ever since …
It is time to cut the cord connecting banks to the Fed, as both have abused their independence and power.
Removing their independence gives the voters at least a chance of influencing the future path of banking, whether central or commercial.
History of Bank and Fed Corruption …
As you can see in the graph below, 1981 was the turning point for the banks. Raising rates to 16% to fight the inflation of the 1970s put the economy on a ventilator.
And the Carter administration had no choice but to turn to the Fed and the banks for help …
However, this opened the door for Ronald Reagan and his administration to slash bank regulations and there was no looking back.
The real economy shifted to a financial economy and the boom-and-bust cycle began.
Each time the economy suffered, the banks looked to the Fed for support and then would engineer a new asset bubble that enabled them to increase profits at the expense of investors.
Here are the major Fed /Bank blowing aset bubble episodes that would always end in tears for investors …
- The 1987 Flash Crash
- The Savings & Loan Crisis of 1989
- The Internet Bubble of 2000
- The Financial Crisis of 2008
- The Everything Bubble of 202?
I have nothing against J-Pow. He seems like a very nice man. However, I am sure he — like most insiders — knows that the Fed has become hyper-politicized.
Even though appointing a Democrat as the chairman of the Fed may make it worse, if it finally breaks the stranglehold the Fed and banks have on the US economy then Lael Brainard gets my vote
Bring it Home
This appointment to the Fed could become a much larger issue for the markets in the weeks and months ahead. Brainard would become an enabler for the administration to pass revolutionary legislation …
It would most likely include a fast track for digital dollars, giving the Fed the ability to use their printed dollars as legal tender and send it directly to US citizens.
It would also reduce banks’ role in the economy and create a more level playing field and equal opportunity for all Americans.
Live and Trade With Passion My Friends,