“OK, look,” Trump said during a presidential debate, “we have the worst revival of an economy since the Great Depression.
“Believe me, we’re in a bubble right now. The only thing that looks good right now is the stock market and if you raise interest rates even a little bit, that’s going to come crashing down. We are in a big, fat, ugly bubble.“
Although his habit of saying “Believe me” before everything he says (as if that’s proof enough) can get tiresome, he’s not wrong.
The bubble is big. The bubble is fat. The bubble is ugly.
Trump then dared say the name which… in polite crony circles… dare not be spoken, especially not in front of the unwashed masses: “And we have,” he said, “a Fed that’s doing political things.”
Yes, he’s been critical about the Federal Reserve. And he’s even made mention of going back to the gold standard.
But, of course, politicians talk. Rarely do they walk it. (And yes, as we can all see, Trump’s a politician now.)
So, come on, does that mean Trump plans to do anything about it? More importantly, can he? According to Bloomberg’s Narayana Kocherlakota, the answer is yes… he can. There’s a little-known loophole that could spell trouble for the Fed, if Trump decides to exploit it.
We’ll look at that loophole — and explore an interesting prediction from Birch Gold Group — in a moment.
First, though, there’s something you should know: How to protect yourself when the bubble blows. And according to David Stockman, watch out, the bubble is ready to blow… very soon.
“After Donald Trump’s presidential campaign staff contacted me for economic advice,” Stockman wrote in the letter, you’ll recall, I sent you yesterday, “I rolled up my sleeves to do the deep research necessary to pinpoint the exact day our ‘Big Fat Ugly Bubble’ will start to blow up.
“Bad news,” Stockman warns: “It starts just days from now.”
Which is why, again, Stockman’s putting together an urgent live training event next Thursday, Dec. 8. He’ll be broadcasting the free video feed live from his home in Aspen, Colorado.
What makes this broadcast so urgent, you ask?
“Just days after our broadcast — on December 15 — the Federal Reserve will have raised rates again,” says Stockman, “and markets will have repriced already.”
There are two things you need to know before that happens. You’ll learn all about them by clicking this link or the video below.
Now, the BIG question: Will Trump do something about the Fed?
Well, the precious metal IRA gurus at Birch Gold Group have an interesting take. Their newsfeed reads:
With the exception of a couple isolated periods in U.S. history, the Federal Reserve has operated as an independent entity, with practically zero accountability to any branch of the U.S. Government. As a result, the Fed maintains the ability to manage and manipulate the economy without the fear of political repercussions or punishment from government officials.
If you’re wondering whether or not that kind of autonomy is a good thing, just take a look at the treacherous boom-and-bust cycle our economy is currently stuck in.
But there’s one loophole that could rain on the Fed’s party. According to Narayana Kocherlakota, there’s no law on the books that protects the Fed’s independence the broad freedom assumed by the Fed over the past several decades relies solely on the president’s discretion.
Plus, it speaks volumes that just days before the election, Fed chair Janet Yellen started to publicly argue the importance of an independent Fed.
In short, if he wanted to, Trump could plausibly rein in the Fed. There’s only one move you need to focus on to see how serious he is. Birch goes on:
For over a year, two seats on the Federal Reserve’s Board of Governors have remained empty. Discord between Obama and federal legislators kept them unfilled. But with Republicans now holding control of both legislative branches as well as the White House, we can expect those appointments to finally be made.
Trump’s picks for those seats will most likely be significantly different than Obama’s, potentially changing the dynamic of the Fed drastically.
The board members, though not as heavily publicized as the Fed’s chair and vice chair, still wield a great deal of power over financial policy in the U.S. Furthermore, the two new board members appointed by Trump will likely share his pro-growth agenda and give him even more control and influence over the Fed’s actions.
In just two short years, Trump will have the chance to make one massive change to the Fed by appointing a new chair and vice chair. And if Republicans maintain control through the 2018 election, he’ll have an unprecedented chance to appoint his candidates of choice with minimal opposition.
The lasting impact of this event alone could be one of the biggest hallmarks of Trump’s presidency.
Today, to drive home the importance of this potential move, we invite Dr. Ron Paul to the show.
As you know, Paul has been at the forefront of the “End the Fed” movement. And though we’re not holding our breaths, the window, it seems, is as open as it’s ever been.
To Really ‘Make America Great Again,’ End the Fed!
Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy money/low interest rate policies as a source of the public anger that propelled Donald Trump into the White House.
Mr. Fisher is certainly correct that the Fed’s policies have “skewered” the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank.
Federal Reserve-generated increases in money supply cause economic inequality. This is because, when the Fed acts to increase the money supply, well-to-do investors and other crony capitalists are the first recipients of the new money. These economic elites enjoy an increase in purchasing power before the Fed’s inflationary policies lead to mass price increases. This gives them a boost in their standard of living.
By the time the increased money supply trickles down to middle- and working-class Americans, the economy is already beset by inflation. So most average Americans see their standard of living decline as a result of Fed-engendered money supply increases.
Some Fed defenders claim that inflation doesn’t negatively affect anyone’s standard of living because price increases are matched by wage increases. This claim ignores the fact that the effects of the Fed’s actions depend on how individuals react to the Fed’s actions.
Historically, an increase in money supply does not just cause a general rise in prices. It also causes money to flow into specific sectors, creating a bubble that provides investors and workers in those areas a (temporary) increase in their incomes. Meanwhile, workers and investors in sectors not affected by the Fed-generated boom will still see a decline in their purchasing power and thus their standard of living.
Adoption of a “rules-based” monetary policy will not eliminate the problem of Fed-created bubbles, booms, and busts, since Congress cannot set a rule dictating how individuals react to Fed policies. The only way to eliminate the boom-and-bust cycle is to remove the Fed’s power to increase the money supply and manipulate interest rates.
Because the Fed’s actions distort the view of economic conditions among investors, businesses, and workers, the booms created by the Fed are unsustainable. Eventually reality sets in, the bubble bursts, and the economy falls into recession.
When the crash occurs the best thing for Congress and the Fed to do is allow the recession to run its course. Recessions are the economy’s way of cleaning out the Fed-created distortions. Of course, Congress and the Fed refuse to do that. Instead, they begin the whole business cycle over again with another round of money creation, increased stimulus spending, and corporate bailouts.
Some progressive economists acknowledge how the Fed causes economic inequality and harms average Americans. These progressives support perpetual low interest rates and money creation. These so-called working class champions ignore how the very act of money creation causes economic inequality. Longer periods of easy money also mean longer, and more painful, recessions.
President-elect Donald Trump has acknowledged that, while his business benefits from lower interest rates, the Fed’s policies hurt most Americans.
During the campaign, Mr. Trump also promised to make audit the fed part of his first 100 days agenda. Unfortunately, since the election, President-elect Trump has not made any statements regarding monetary policy or the audit the fed legislation.
Those of us who understand that changing monetary policy is the key to making America great again must redouble our efforts to convince Congress and the new president to audit, then end, the Federal Reserve.
[Ed. note: This article originally appeared on the Ron Paul Institute for Peace and Prosperity page right here.]
The Ron Paul Liberty Report
P.S. Have something to say? Say it! Chris@lfb.org