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1.5.2019 - Free Investing Newsletter Bookmark

Is The Fed Planning On Killing the US?
 
NOTE:  I teased you all on New Years that I was going to start a stand alone product for the long term investor. The person that can't be as nimble as us in trading, a person that only wants to fiddle with things once a month or less, yet take in above average returns. This is a reality, and it will begin shortly. ( the first issue could go out as early as next week) The hold up has been pricing

 
I always feel an obligation to my current Insiders members, they trusted in me enough to buy my product, and that sits well with me. So, for current Insiders members, this will only cost 99.95 for the entire year. That just about covers emailing costs and administrative costs.
 
For any of you who never became an insider's club member because you can't or don't trade on a daily or weekly basis, the price for the long term investor letter will be 149.95.
 
For the adventurous that would like to be a member of BOTH the long term letters and the daily letters, it's 299.95 for everything.

So that's how the schedule of pricing will be:
Insiders club - 199.95 /year
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Current Insiders members who want the long term letter - 99.95 /year
Someone new that wants both Insiders and long term - 299.95 /year
 
The sign up page will probably be up later in the week. I'll send you all a short email when it's there. Folks, if you've been a member with me, or a long term reader of the free newsletter, you know I don't "sell" things to you. I don't' even have ads in the newsletter. But I am selling this to you as best I can. I want you to subscribe to this new service, because it's going to be a very big deal. We're going to take oversized returns, with the least risk possible, and make it simple enough that any 12 year old could do it. Look for it soon!
 
OKAY...
 
There's never any shortage of good theories out there concerning just about any topic. But one of those topics, truly does get you to wondering things. For instance, there are many who believe that the Fed has been instructed by the globalist elites, to hike rates and crash the economy.
 
Why would they do that? Well, for one thing, people tend to allow themselves to be more controlled, the poorer they are. So, one train of thought is that to get the peons more in tune with the idea of globalism, open borders, homogenous people, etc, all they have to do is create an economic situation where millions more will need Government assistance to survive. People on Welfare, don't do much fighting back against One World agendas.
 
Then there's those that figure that the globalists hate Trump so much, that if they can't get him impeached, they'll crash the economy so that the people will turn against him and he won't get re-elected come 2020. Actually the two sort of go hand in hand, if the economy implodes, millions are laid off, and they blame it all on Trump, they will have then gotten rid of Trump AND got the masses more under their thumbs.
 
So it's an honest question. Is the Fed deliberately going to crash the market by hiking rates?
 
Now, let's always remember that the Federal Reserve is an evil unto itself. Their stated goal is to "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates." That's the mandate that Congress applied to them back in 1977. So how have they done? They've done nothing of the sort.
 
Stable prices? In what universe? The US inflation calculator is an amazing tool. You simply plug in the price of something you might have bought in 1913 and the amount it cost. Then it shows you what it would cost today. So, if I bought something for 20 bucks in 1913, it would cost me 509 to buy that same item today.
 
They look you in the eye and tell you they are shooting for 2% inflation every year. On what planet is losing 2% of your purchasing power, stable? Then they give you the argument that it's okay, because your wages will outpace that inflation and you'll be in fat city. Really? Wages stagnated in the US in 1980 and have gone nowhere fast since then.
 
After adjusting for inflation, today's average hourly wage has just about the same purchasing power it did in 1978, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then. In fact, in real terms average hourly earnings peaked more than 45 years ago: The $4.03-an-hour rate recorded in January 1973 had the same purchasing power that $23.68 would today.
 
So much for stable prices, or wages keeping up with their magic 2%. With that in mind, you first understand that if we start the clock in 1916 with a dollar being worth....a dollar, and they yank 2% or more out of that value every year as their goal, it doesn't take a fellow of Lucasion mathematics to understand that at some point...that dollar's worthless. We're almost there. It's worth a nickel now.
 
So, while it's clear that they suck at keeping prices stable, or wages competitive with inflation, that doesn't answer the question, are they willfully going to implode the economy and get rid of Trump, and enslave more people?
 
For ten years I've been preaching that a global reset is coming. In a lot of ways, we're in it right now. Debts that can't be paid, will not be paid. A monetary system that devalues the currency by 2% a year, cannot last forever. The IMF has already floated the trial balloon of digital currency, and Bitcoin was their first shot at practical application. A test run so to speak.
 
So yes, this system is going to be replaced. We know what the globalists want, they want a one world currency. But what do the "White hats" want? What about the people pushing back against the deep state, and the globalists? Do they want a centrally controlled digital currency? Heck no. They'd love a gold standard.
 
The "problem" comes in with a simple question. Is the Fed willing to crash the US economy to achieve the Globalists wet dream? Well, first off you can argue successfully that every bubble and every crash has been because of the Fed, so history says they have no problem doing it. It's the "blame" they don't like. The Fed's NEVER want to be blamed for anything, and crashing an economy is a big something.
 
There are those that say the IMF/World banksters have decided to toss the US under the bus and if it takes the Fed with it, so be it. In other words, those socialist evil bankers will stop at nothing to achieve their end goal, which is their one world order.
 
So, do I believe that? Yes and no. Let me explain. I think globalist banksters are wickedly evil people. I think they're greedy, I think they're satanic. However, they aren't stupid. Communism and socialism hasn't worked in any of the Nations that adopted it, and all have turned into crapholes. The banksters didn't get rich lording over peasant farmers with no money. They got rich loaning money at interest to nations, businesses and wars.
 
Are they willing to ignore that income? If 200 million US Citizens were plunged into poverty, with no jobs and no income, and were sucking off the teats of Uncle Sam to survive, how exactly does that enrich the banksters?? It doesn't. Thus, I don't much subscribe to the idea that the Fed's are going to crush the US and turn us all into serfs "on purpose"

What I do believe however, is that the mechanics of all the debt loads, the inflation, the currency devaluations, etc, are now at a point where it doesn't matter what they do. We're in the last inning of the game. The wheels are falling off. Take away one-time mood boosters - the unfunded tax cut, the unfunded extra federal spending, the repatriated profits, buybacks, and extra debt - and the whole "growth" story disappears.
 
There's not too many levers left to pull and buttons to push to fix things. Instead, I think they will do their best to make it look like they're doing all they can to fix things, simply so they don't get the blame for the crash.
 
Many have screamed at the Fed for hiking rates 1) too late in the cyle and 2) when clear evidence of a slowdown is apparent. I agree. But the reverse is also true. Unless they get rates "up" some, when we're in the depths of recession, they've got no room to cut them.
 
A bigger issue for me isn't the rates. For 100 years you could function and thrive with 5, 6 and 7% interest rates. Now, we're scared to death of 3% because of so much debt that has to be serviced at a higher cost. I however feel that the removal of their balance sheet is equally if not more important. Liquidity is the grease that keeps the gears moving. If they stop the "quantitative tightening" by just hiking rates, but ending the balance sheet reduction, things won't be any better but we can lessen the effects of the crash. Do both hikes and reduction, and it's clear they're willing to crush us.
 
My bet is that they don't hike any more on rates. But I'm very interested in seeing what they do with the balance sheet. If they don't stop trying to reduce that, while we enter recession, then again, it's clear they are okay with people being crushed. I think they want to save the US as their cash cow, at least until the new monetary system is ready to replace the current system.
 
They had the perfect chance to blow up the US economy in 2008. We were literally days if not hours away from total economic lock up. Instead they went "all in" to save things. Am I to believe that now 10 years later, they'll do the opposite and willfully crush us? I don't. I think the crushing is coming, no matter what they do, and thus, they'll play it like they've "done everything we can to fix this".
 
It's going to be a very very interesting year. Strap in.
 
The Market:
 
The above commentary was written on Thursday afternoon. As you might know, Friday morning the head of the Fed was going to be speaking and all eyes were on him. Just as I suspected on Thursday, the Fed head said he was very willing to change course on rates if things start to get shaky.
 
But more importantly, when commenting about reducing the balance sheet, he said quite bluntly that if reducing the balance sheet has negative ramifications on the overall economy, they'd be willing to stop that.
 
So it appears that the Fed isn't out to blow up the US economy. As I said above, the damage has already been done. Now they'll go through the motions of trying to make it look like they didn't blow us up. ( they did by blowing the "everything" bubble)
 
On the heels of what they think was a great employment report, and the comforting words out of Powell, we had one of the strongest up days in history. We gained 746 DOW points. Amazing.
 
If you remember back a month, I have said repeatedly that we could get one last hurrah rally, if two things happened. 1) if the Fed's relent on hiking rates and 2) if we get a trade deal with China. Well, you see what happened with just one leg of that. Imagine if Monday they said a China deal is now on the table? Wow.
 
But be warned folks, one day does not a trend make. The top 12 sessions for the S&P 500 of all time, happened in official bear markets. Not to mention 21 of the best 25 days (the other 4 were in 10%+ corrections). Word to the wise.
 
While Friday very well could kick off a short covering/oversold rally of substance, I don't believe for a second that it signals a new leg higher that takes us to all new highs. In fact, I would use any big rally we get, to actually lighten up positions, and consider entering some short side positions.

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