Op-ed views and opinions expressed are solely those of the author.
The Fed has set an intellectual trap for itself. They’ve said that 2% inflation is what they want and that the cure is rate increases. If the upcoming CPI numbers continue to come in hot, and the market falls 10% or more and keeps crashing, then the Fed will have lost all credibility.
We’re seeing the balloon having the air let out of it instead of popping. And to a certain extent, we’ve seen that happening all year in what we called a slow-motion stock market crash that has lasted essentially 9 months.
On April 21, 2022, Carnivores sent out an alert that we were at risk for a market crash. Since then the NASDAQ is down over 20% and the S&P 500 is down over 15%. On October 11, 2022, we put out an alert to our subscribers that our systems are indicating we are at high risk for a crash event of some magnitude in the next 21 days. The real reason for this is a Fed that appears to be focusing on the labor market, which we feel is absolutely the wrong thing to be looking at as an economic indicator since the pandemic made it obsolete. We also feel that the Fed has made the fatal error of not giving itself an offramp to the rate increases. The Fed should have said that they’re going to be data-dependent and raise rates aggressively to combat inflation – unless market instability dictates they do something different. Because market instability is what we see occurring right now, here and abroad.
There are no dissenters at the Fed on its policy. That is concerning. The Fed governors are, with the exception of the guy from Atlanta, idiots. They just aren’t that smart. They’re not there because they’re smart. Many of them are there now because it was more important to our so-called leaders that we have a Fed that is “diverse” instead of a Fed with the smartest financial minds.
When we had a financial crisis in the past, we had fate on our side. We had Ben Bernanke at the Fed. That was fate. We were lucky. He was probably the only man who understood what had to be done to fix the crisis. He knew what to do, and he knew what would happen if we didn’t take certain actions. He literally saved the world’s financial system from seizing up and failing. He had to get it across to the idiots in our government that if they didn’t do what he said to do, which was inject billions into the system instantly, Americans would no longer live the lives we had gotten used to, that ATM machines would no longer function, everything would seize up and cease to work. Financial Armageddon. They finally got it and did what Bernanke said to do.
The problem today is that we don’t have a Ben Bernanke in place now and we face another major crisis. We have lightweights at the Fed who don’t get what they’re doing. They’re going to crash the markets and maybe cause a sovereign debt crisis. The treasury market isn’t acting right, there is a lack of buyers for US Treasuries (not good) and they’re about to crash the real estate market. They’ve already crashed some currencies and commodities.
Some very smart guys get it. Mohammed El Erian gets it. Kissinger gets it. Jeremy Seigel gets it. Jeff Gundlach in the money management world. Mark Cabana the Fed guru gets it. But nobody is listening to them.
Strangely, the liberal left media went after Jeremy Seigel and tried to cancel him for his comments. The press crucified him, defending the Fed and the administration for its anti-American and anti-US energy policies. They’re not listening. Not listening to the smartest guys in the room? Really dumb. Worse, the media is trying to cancel these voices and we have an administration that is totally ignorant of the entire financial situation here and abroad. If the CPI, which will be released this week, doesn’t cool off significantly, and the Fed continues to focus on the Labor market and raise rates, then we will enter a whole new world where the people we’re counting on to act rationally are not acting rationally, and that’s when the wheels can and will come off.
None of this had to be this way, but it is what it is now. The Fed has backed itself into a corner, and all we can do is trade properly given what we have before us, as ugly as it is.
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