It was conceded by the stock market a half a year ago that the December 2018 meeting of the Federal Reserve would end in another rate hike. Somewhere along time and space, the stock market caught a cold from the usual. This is unusual due to the nature of the market. It looks beyond the daily news to a minimum of six months out in the time continuum. However, the extremes began to show their differentiation as time moved along. The outlook of six months ago and how it is today is vastly different. The Masters of the Universe are blinking with doubt. This is a serious problem when the currency is based on faith and nothing else.
Usual Suspects
The tariff talk became an actual tariff. The tit-for-tat escalated the tension. The market began to sneeze until the virus became a cold. The reason that the remedies could not fight off the on coming cold was the bacteria of a government shut-down. The awareness of the magnitude of our outstanding debt and how it would grow in interest payments due to the policy of the Fed who is seeking to return to normalize interest rates. Greed became fear. This internal shakeup caused the cells to weaken and the virus won the battle between the red and blue cells. The virus will hit all alike.
There are other influences in the environment which allowed the virus bacteria to grow like the immigration problem like the war on drugs like the actual wars in the Middle East and the distance of elected officials to the public.
Europe
In Europe the "populist" movement is gaining traction while at the same time the EU is facing a crisis with Brexit. I think the results of no action with Brexit will stimulate the populist movement. People will take a hard line against their governments who do not fulfill the will of the people. This is a slow boiling pot. The immediate condition of the EU is being determined by its central bank. Mario Draghi, the President of the ECB has stated no more stimulus. Then, he added the present allocation of medicine will last until the summer of 2019. The head of the IMF, Lagarde stated the global economy will slow in 2019. The two agencies reminded everyone of their independence in policy.
Back to the Fed
The wording of the last meeting by the Fed had its chairperson state that his committee felt the gradual rate hike policy would slow even further in the future. The chair, Jerome Powell who took office in February of this year and who was appointed by President Trump, reiterated the importance of the aspect that the Federal Reserve is an independent body from politics. According to the chairman, this is the cornerstone of the Federal Reserve.
This is a lie as the Federal Reserve as a concept was pushed by bankers and it is run by bankers with the unwritten premise to protect the banking system. It is socialism for the industry, but step away from that fact to the current dialogue - its independence.
This is another lie. The chairman is appointed by the president with the backing of the senate. This point is the weak link in democracy. The Senate is composed of millionaires and rarely do they ever do something for the people. The president gets to choose a nominee from people who express similar believes in how to achieve economic success. This person has set ideas. If a different political president was in office, that person might seek a nominee with different beliefs. You can see this more clearly with the other weak link in democracy - the Supreme Court.
You appoint a racist. You get separate but equal. You appoint a more liberal chair and separate but equal is unconstitutional. So, to say that Powell is independent is misinformation. His baggage is his beliefs. His reflection to slow the pace of rate hikes is appeasement to his boss.
So, when Powell raised the interest rates he got the ire of the president. President Trump has stated his opposition to higher rates and he even stated that maybe his choice to run the Fed was a mistake. The following day, the New York Fed Governor, John Williams declared that maybe the Fed should pause on rate hikes. Dear Reader, the New York Fed Governor is the most important member of the committee. More N.Y. Fed representatives become the chairman than any other region. Williams is singing the "Donald's" song. Since President Trump's administration is clouded with musical chairs in the executive branch, this change in position is a possibility. With that said, there are already a host of economic scholars(professional students) declaring this change in the chair of the Fed will spin the market into chaos and then, sink the economy.
It appears that Sebastian's prediction to fear the Ides of March as pertaining to our economy is looking to be correct. Sebastian thinks that fiat money is the root cause of all our economic problems. Consider how the stock market is reacting to the idea of this long played out return to a normal interest rate. It can't handle it! Fiat money was so easy to print, but the reality of the debt financing is overwhelming. At normal interest rates the economy will implode. The only true independent policy is a policy based on a currency that has its cornerstone in strength. That strength is written into our constitution. It is GOLD.
If you spend more than you collect, your currency will decline. You will get inflation. Gold keeps politicians honest and bankers in check. It forces them to spend wisely and to live within your means. This is the only true independent policy. Everything else is a lie.
