The Fed is not going to act until after the crash

By: Curtis Wayne 0 Comments   2/11/2016

That is basically the message from the Fed yesterday.  In Yellen’s testimony before congress, she said she thinks the market should be just fine because the Fed is still holding rates very low.

“…It is important to note that even after this increase, the stance of monetary policy remains accommodative.”

She also thinks that because the unemployment rate remains very low and inflation is around the target of 2%, there is no need to do any future action at this time.

Here are her words that lead me to this reasoning.

“…we will regularly reassess what level of the federal funds rate is consistent with achieving and maintaining maximum employment and 2 percent inflation.”

Yellen has no idea what is going on.  The world markets are already crashing.  Japan’s currency is imploding, China and Europe are in decline. 

Yellen has no idea that the only thing that pushed up stock markets around the world since 2008 is the continuous stream of new money that the Fed has been printing.   

There is no real economic recovery.  

Yellen believes in the Fed’s own narrative that the Fed saved the world from the 2008 crash and retuned the world to growth.

Her faith in this narrative is about to be shaken.  

Without the Fed’s QE, the markets are going to crash.  The numbers that Yellen is looking at to say that the economy is fine - are bogus.  The unemployment rate is much higher, we have a 40-year high of people not working (living on food stamps and government programs) and the wages of those that are employed are lower than they were just a few years ago.

The inflation has been low because the world is awash in debts and cannot afford to let their exports drop by way of their currencies appreciate against the dollar.  So the Central Banks of the world have been printing their own money and buying up all the dollars the Fed has been printing.  This has worked in our favor to keep inflation low and give the appearance that the US and other nations are growing. 

But in reality, no nation is growing, they have just been printing money.  The game is just about over, because many nations are now suffering massive inflation from all the money printing as their currencies are now dropping against the dollar.  In order to stop inflation and stop investors from selling everything, they are forced to reverse course and sell dollars.  We are seeing the beginning of the long anticipated dollar crash.

The Fed does not realize what is going on.

They are not taking action like they did with QE1, QE2 and QE3, in which they did not allow the markets to crash.

This time is different.  The markets are going to crash before they realize what is going on.  And by the time they start planning QE4, the markets are going lose so much money that they are going to have to print more money than ever before.

And at that time, inflation will begin rising because other nations are selling dollars to protect their own stock markets from crashing. 

The Fed will be trapped, they will need QE4 to restore the markets but QE4 will destroy the value of the dollar and bring a massive wave of inflation that we have not yet seen.

This is going to be a year for the history books.

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