The Fed is raising rates aggressively. But they didn’t keep interest rates close to zero for 14 years for no reason: it was because rising rates will make the Mega Debt unpayable. They say they’re raising rates to ‘fight inflation’, but in reality, the Fed is pulling the trigger on the Debt Bubble.
The Fed first started tapering in 2018. This, as predicted, immediately led to a deflationary shock, and in September 2019, they ‘had to’ restart Quantitative Easing. To bail out both the banks, and the real economy, both facing a liquidity squeeze. This came to a climax in the weekend of March 18th 2020, when they gave Wall Street $4 Trillion to at least temporarily fix their balance sheets, while they locked up 4 billion of us, to prevent a popular revolt over the bailout.
But they ‘went too far’ (these fools know exactly what they’re doing), creating massive asset bubbles, and rising prices in the real economy. And creating the problem, infuriating everybody faced with exploding prices (the reaction), and now implementing the solution: raising rates ‘to fight inflation’. But there was a reason the Fed and other Central Banks have kept interest-rates close to zero since the 2008 crunch: debt became unpayable around 2008, and to prevent an immediate mass default, they kept the cost of borrowing low. Since then, debt has only multiplied, and with it the need for eternally low interest rates.
We have already seen what happens when the Fed tightens, in September 2019: liquidity in the economy, both financial and real, will dry up, and defaults will result, and these will in turn crunch the commercial banks. There is simply zero reason why it won’t happen again this time. The only question is when.
Anthony Migchels Archive
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