Ron Paul ALERT🔴 In Feb 2019 Major Events Coming To US-Fire The Fed? Economic Crash Continues

Ron Paul: Fire The Fed?

By firing Powell, President Trump would once and for all dispel the myth that the Federal Reserve is free from political interference…President Trump’s frustration with the Federal Reserve’s (minuscule) interest rate increases that he blames for the downturn in the stock market has reportedly led him to inquire if he has the authority to remove Fed Chairman Jerome Powell. Chairman Powell has stated that he would not comply with a presidential request for his resignation, meaning President Trump would have to fire Powell if Trump was serious about removing him.

The law creating the Federal Reserve gives the president power to remove members of the Federal Reserve Board — including the chairman — “for cause.” The law is silent on what does, and does not, constitute a justifiable cause for removal. So, President Trump may be able to fire Powell for not tailoring monetary policy to the president’s liking.

By firing Powell, President Trump would once and for all dispel the myth that the Federal Reserve is free from political interference. All modern presidents have tried to influence the Federal Reserve’s policies. Is Trump’s threatening to fire Powell worse than President Lyndon Johnson shoving a Fed chairman against a wall after the Federal Reserve increased interest rates? Or worse than President Carter “promoting” an uncooperative Fed chairman to Treasury secretary?

Yet, until President Trump began attacking the Fed on Twitter, the only individuals expressing concerns about political interference with the Federal Reserve in recent years were those claiming the Audit the Fed bill politicizes monetary policy. The truth is that the audit bill, which was recently reintroduced in the House of Representatives by Rep. Thomas Massie (R-KY) and will soon be reintroduced in the Senate by Sen. Rand Paul (R-KY), does not in any way expand Congress’ authority over the Fed. The bill simply authorizes the General Accountability Office to perform a full audit of the Fed’s conduct of monetary policy, including the Fed’s dealings with Wall Street and foreign central banks and governments.

Many Audit he Fed supporters have no desire to give Congress or the president authority over any aspect of monetary policy, including the ability to set interest rates. Interest rates are the price of money. Like all prices, interest rates should be set by the market, not by central planners. It is amazing that even many economists who generally support free markets and oppose central planning support allowing a government-created central bank to influence something as fundamental as the price of money.

Those who claim that auditing the Fed will jeopardize the economy are implicitly saying that the current system is flawed. After all, how stable can a system be if it is threatened by transparency?

Auditing the Fed is supported by nearly 75 percent of Americans. In Congress, the bill has been supported not just by conservatives and libertarians, but by progressives in Congress like Dennis Kucinich, Bernie Sanders, and Peter DeFazio. President Trump championed auditing the Federal Reserve during his 2016 campaign. But, despite his recent criticism of the Fed, he has not promoted the legislation since his election.

As the US economy falls into another Federal Reserve-caused economic downturn, support for auditing the Fed will grow among Americans of all political ideologies. Congress and the president can and must come together to tear down the wall of secrecy around the central bank. Auditing the Fed is the first step in changing the monetary policy that has created a debt-and-bubble-based economy; facilitated the rise of the welfare-warfare state; and burdened Americans with a hidden, constantly increasing, and regressive inflation tax.

Debt Consequences: Time To Pay The Piper

TIME TO PAY THE PIPER: 
No Amount of Market Manipulation Can Save Us From Debt Consequences

Dear Reader,

It’s amazing to see how the Federal Reserve doesn’t even try to hide its policy of market manipulation anymore. The prop job can’t be denied or defended when the same Fed that prints money into oblivion releases perfectly timed announcements that the economy is strong while knowing that the markets will react with glee and euphoria.

Much like central banks in Japan and Europe, the Federal Reserve has utterly destroyed the bond market with yields that barely match the rate of inflation. They’ve forced savers, investors, and retirees into a shaky, overblown stock market that’s held up not by corporate earnings or national prosperity, but by swift and consistent stick saves from the Plunge Protection Team.

Not that America is the sole offender: globally, there are $8.5 trillion worth of securities that yield less than zero, if you can believe it. And when taxes and inflation are factored in, there’s no place on the yield curve where any investor in so-called “risk-free” securities can earn more than zero. Indeed, one sourceestimates that in 2016, global interest rates were at the lowest level they’ve been in 400 to 500 years.

Meanwhile, these same governments are building a debt bomb that’s ready to explode and take the economy and markets with it. America leads the way in this regard, with the aggregate outstanding U.S. Government debt totaling $34.3 trillion at the moment:
 

Naturally, the government doesn’t want to pay high interest rates on its debt, so interest-rate suppression is viewed as a must. Besides, just raising the 10-year T-note yield to a mere 3% precipitated the first S&P 500 bear market since 2008-2009, so don’t count on seeing the Fed do any bona fide “normalizing” anytime soon.

And yet that’s exactly what the Federal Reserve ought to be doing:shrinking its balance sheet and finally allowing interest rates to normalize so that Treasuries can once again be a viable investment option. Or, in the well-crafted words of Jim Grant, “It would be lovely if we had rates that paid you something to invest in them. And it would be lovely if the Fed’s balance sheet were not in need of a program at Weight Watchers.”

But don’t hold your breath waiting for that to happen. The government’s own data indicates that interest rates will be going nowhere fast, even while the debt continues to mount at an alarming rate: The government foresees having to spend $900 billion per year – not on the debt itself, but only on the interest payments on the debt. Of course, it’s not really the government having to cough up that money – it’s you, me, and every taxpayer and future generations will pay a hefty price for the sins of their fathers and grandfathers.

So when the Fed proclaims that the economy is running smoothly, they’re not incompetent forecasters; they’re lying through their teeth while knowing exactly what the future holds and counting on the public and investors to just accept it as inevitable. They know darned well that an economy built on debt can’t sustain itself in a high-interest-rate environment.

Thus, we now have the Powell put, just as we had the Yellen put before him and the Bernanke put before her. No central banker has the guts to buck the system that’s been in place for all these years, and as Peter Schiff has said, the tightening cycle is over and the next likely phase is a shift back to zero-percent interest rates and QE4, the ugly sequel to QE1 through 3.

But this won’t save us, as the piper must and will be paid when the debt is beyond repayment. It’s a tragic ending to a story written by politicians and con artists, mired in lies and machinations and benefiting the few at the expense of the many. 3 Ways the Government Shutdown forecasts a totally boring federal collapse

Imagine: the federal government collapses, poof, gone.

Maybe it’s 2034, the date the government admits it can’t pay it’s $50 trillion Social Security bill.

Or maybe it’s earlier. The national debt is at almost $22 trillion, plus the massive everything-bubble created by the federal reserve money printing. Those don’t bode well for the future of the dollar.

It is inevitable that all this debt and the debasing of the US dollar will eventually hurt.

The longest government shutdown in history is a tiny preview, a little case study on what is coming when the federal government shuts down for good.

When it can’t pay its bills, when it runs out of cash flow, or when the US dollar has no value, what will happen?

Will planes fall out of the sky, and terrorists wield AK-47s in the rapidly crumbling streets? Without USDA guidance, humans begin subsisting on dirt and tree bark.

Or… perhaps federal workers will find themselves a private sector job in the emerging gig economy.

Maybe state governments will step up to fill whatever services their voters think were necessary from the federal government.

And maybe we will see government agencies replaced by the private sector.

Sound too good to be true? Because all three of these things are already happening in response to the government shutdown.

1. Unpaid, furloughed government workers have started working gig jobs like temporary labor, security guards,  renting rooms on Airbnb, and driving for Uber.

That’s the great thing about the gig economy, where people do contract work and get paid when they complete each task. You can easily jump in and start serving clients in whatever field you know best.

Name one successful company that has 800,000 non-essential employees.

That’s what the government has. Which makes you wonder why exactly we are taking tax dollars from one American, and handing it to someone to do a non-essential job…

For them to instead fill the jobs people want to pay for in the private sector will vastly improve the economy.

The government jobs don’t just go away, they go somewhere else. And that would be even more pronounced if federal taxes didn’t suck up so much of our income.

To be fair, some gig jobs are pretty bottom of the barrel. You’re not going to get rich driving for Uber, and in a couple years, self-driving cars will put you out of a job.

But that’s why it is so important to address this now instead of when the true crisis hits. Government workers need to think about what they would do if they lose their “super-safe” government job for good.

But at that point, we will also see states step in to fill some of the void the feds have left in their wake.

2. Calfornia is paying unemployment benefits to federal workers.

This is actually in opposition to federal guidelines. They say it is fine to provide unemployment benefits to workers who are not being paid and are staying home, but not employees who still have to report to work.

If we can avoid the whole debate about the role of government for a moment, we could view this as an encouraging sign that states are willing to ignore the federal governmentand do what they think is best for the people of their state. We could use a bit more state power asserting itself against the feds.

As I’ve argued in the past, with 50 state governments ready, the federal government could completely disappear without the world ending.

Yes, there would be some reorganizing, but that is a good thing. It would make the economy more efficient.

And it would allow people to “vote with their feet” and shop around for the best government policies, without having to leave their English speaking homeland. It could be a real boon for states that set favorable policies.

So would Californians still have a freedom-crushing high tax nanny state? Probably, but their policies wouldn’t affect all of us.

I think state governments replacing all the roles of the feds is a step in the right direction. But ultimately, the less the government controls the better.

3. More airports are considering opting out of the TSA (Transportation Security Administration) in favor of hiring private security.

San Francisco International hasn’t noticed the government shutdown, and its screeners are still getting paid. They aren’t experiencing long lines, mass call-outs for sick days, or lax security standards. They use private security.

22 US airports already use private security.

But airports have to get permission from the TSA to fire them and hire their own private security.

As USA Today points out, any organization has an incentive to protect its own record and budget. If the TSA sets the standards, it should definitely not also be carrying them out. Otherwise, it has an incentive to protect itself rather than the flyers.

Of course, this is all a massive conflict of interest, but that’s classic government for ya.

From basically any perspective you look, airport security should be private.

·         The TSA fails at their mission at least 80% of the time, regularly letting through weapons and contraband in tests

·         With private security, airports aren’t affected by political disputes

·         Instead of taxpayers funding security, the airlines making money (and the people flying) pay the cost

So when the day finally comes that the massive debts and liabilities can’t be pushed down the road any further, it won’t be the end of the world. People will quickly reorganize. The more freedom they have to work and spend as they see fit, the easier the transition will be.

But there is another takeaway. Be prepared for a couple of months without income, even if you aren’t a government worker. You should always have enough extra available to make it through a few months of unexpected circumstances.

And finally, it makes sense to diversify your own wealth or savings so that you could transition well in a world where the US finally defaults on its enormous debts and the easy money stops flowing.

Owning gold, foreign currencies, and even cryptocurrencies (if you’re the adventurous sort) can mitigate the risks of being too exposed to the dollar.

You don’t have to play by the rules of the corrupt politicians, manipulative media, and brainwashed peers.

When you subscribe to The Daily Bell, you also get a free guide:

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This guide will show you exactly how to plan your next two years to build the free life of your dreams. It’s not as hard as you think…

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John Rubino: This Is New – Governments Ramp-Up Borrowing IN ANTICIPATION Of A Slowdown

The business cycle has its stages, and they’re usually both predictable and logical. For example, governments tend to generate a lot of tax revenue late in an expansion as more people get jobs and start paying income taxes and rising stock prices generate big capital gains. Meanwhile, less has to be spent on social safety net programs because everyone is working. Combine higher tax revenues with lower spending and you get shrinking deficits.

But not this time. Government borrowing soared around the world in 2018, even as economic growth, employment and stock prices peaked. Why the change? Well, apparently governments have decided – for the first time since the inception of the business cycle – to preemptively attack the next recession.

The US, as everyone by now knows, has returned to crisis-era trillion dollar deficits even as the unemployment rate hovers around 4% and stock prices hit records. That’s historically unusual to put it mildly. But it pales next to what’s happening in China. From Doug Noland’s Credit Bubble Bulletin:

January 15 – Bloomberg: “China’s credit growth exceeded expectations in December, with the second acceleration in a row indicating the government and central bank’s efforts to spur lending are having an effect. Aggregate financing was 1.59 trillion ($235 billion) in December, the People’s Bank of China said on Tuesday. That compares with an estimated 1.3 trillion yuan in a Bloomberg survey.”

January 15 – South China Morning Post (Amanda Lee): “China’s banks extended a record 16.17 trillion yuan (US$2.4 trillion) in net new loans last year…, as policymakers pushed lenders to fund cash-strapped firms to prop up the slowing economy. The new figure, well above the previous record of 13.53 trillion yuan in 2017, is an indication that the bank has been moderately aggressive in using monetary policy to stimulate the economy, which slowed sharply as a result of the trade war with the US. Outstanding yuan loans were up 13.5% at the end of 2018 from a year earlier… In addition, debt issued by private enterprises increased by 70% year-on-year from November to December last year, indicating that the central bank’s efforts to support the private sector are working.”

There’s a strong consensus view that Beijing has things under control. Reality: China in 2019 faces a ticking Credit time bomb. Bank loans were up 13.5% over the past year and were 28% higher over two years, a precarious late-cycle inflation of Bank Credit. Ominously paralleling late-cycle U.S. mortgage finance Bubble excess, China’s Consumer Loans expanded 18.2% over the past year, 44% in two years, 77% in three years and 141% in five years. China’s industrial sector has slowed, while inflated consumer spending is indicating initial signs of an overdue pullback. Calamitous woes commence with the bursting of China’s historic housing/apartment Bubble.

Typically – and as experienced in the U.S. with problems erupting in subprime – nervous lenders and a tightening of mortgage Credit mark an inflection point followed by self-reinforcing downturns in housing prices, transactions and mortgage Credit. Yet there is nothing remotely typical when it comes to China’s Bubble. Instead of caution, lenders have looked to residential lending as a preferred (versus business) means of achieving government-dictated lending targets. Failing to learn from the dreadful U.S. experience, Beijing has used an inflating housing Bubble to compensate for structural economic shortcomings (i.e. manufacturing over-capacity). This is precariously prolonging “Terminal Phase” excess.

To sum up, China built way too many factories and now has decided to pay for the related costs by inflating a housing bubble. That doesn’t sound very smart.

But China’s screw-up is just one in a very big crowd. Noland points out that the other emerging market economies are doing something similar:

January 16 – Financial Times (Jonathan Wheatley): “Emerging-market companies have gorged on debt. Slower global growth and higher funding costs will make servicing that debt harder, just as the amount coming due this year reaches a record high. The result? Less investment for growth and yet more borrowing. These are some of the concerns raised by the Institute of International Finance… as it published its quarterly Global Debt Monitor… The world is ‘pushing at the boundaries of comfortably sustainable debt,’ says Sonja Gibbs, managing director at the IIF. ‘Higher debt levels [in emerging markets] really divert resources from more productive areas. This increasingly worries us.’ Of particular concern is the non-financial corporate sector in emerging markets (EMs), where debts are equal to 93.6% of GDP. That is more than among the same group in developed markets, at 91.1% of GDP.”

January 16 – Barron’s (Reshma Kapadia): “A record $3.9 trillion of emerging market bonds and syndicated loans comes due through the end of 2020. Most of the redemptions in 2019 will be outside of the financial sector, mainly from large corporate borrowers in China, Turkey, and South Africa. The question will be if they can refinance the debt…”

So here we are, ten years into an expansion (which is four years longer than the average one) and governments are not only taking on massive new debts themselves but tricking/cajoling their companies and consumers into doing the same. This will (if cause and effect still matter) do several things:

1) It will make year-ahead growth higher than it would otherwise have been, and combine with the probable resolution of the US/China trade war to give the expansion a brief second wind.

2) It will further tighten labor markets, raising wages and pushing overall inflation up a point or two, which in turn will boost/support interest rates.

3) Higher-than-otherwise interest rates (or simple debt-related exhaustion) will bring the long-awaited recession. And societies around the world will realize they’ve already borrowed all that anyone will lend them, leaving them with very few remaining weapons to fight a deflationary crash.

In other words, the current debt binge is the culmination of a decade of can-kicking in which new credit has filled the gaps created by past mistakes. There’s a limit to how far this can go, and the recession of 2020 might reveal it.