End the Fed?? It's been discussed before.
OPINION: TRUMP'S ABOUT TO PULL OFF THE MOST AUDACIOUS FED HACK IN AMERICAN HISTORY
Trump does not want another constitutional battle. As much as he would love to fire Fed Chair Jerome Powell for not hastily cutting rates at a pace of the administration’s liking, he has another plan. As soon as January, “he will render the current Chair’s role to complete impotence,” according to a source who used to work at the Fed.
In the next few weeks, President Trump will conclude interviews to select the next Federal Reserve chair, announce the appointment, and impose a once-in-history “shadow” mechanism to counter every point the current Chair makes. As markets are forward-looking, the “shadow chair” will have the ability to affect even the closest maturities of the yield curve, and long-term rates will likely plummet way before the current Chair’s term ends.
“The markets are not ready for what will be unleashed; the President practically spelled it out just yesterday by declaring, with authority, that rates will be dramatically lower within 6 months,” claimed the same source. This will likely start to get discounted by markets as soon as January.
Forget everything you think you know about how the Federal Reserve works. Actually, scratch that. You probably don't know much about the Fed anyway, and that's fine. Neither does most of Congress.
Here's what you need to know: America is drowning in debt. Not the $38 trillion everyone keeps yapping about. We're talking $130 trillion when you add up corporate debt, consumer debt, and all those pension promises we definitely can't keep. Globally? Try $600 trillion of global debt and unfunded liabilities.
You can't pay that back. Ever. Not unless you introduce massive, budget-busting austerity, or introduce growth not realistically compatible with current demographics, global outsourcing, and deindustrialisation.
The only way out is to make the debt worth less through inflation.
Print more money, make each dollar less valuable, and suddenly that mountain of debt becomes a slightly smaller mountain. It's like losing weight by redefining what a pound means. And “yield curve jawboning?” In a nutshell, that's manipulating markets so that long-term interest rates, which are linked to mortgage and any asset loan pricing, render your housing, car and other bills lower.
Trump has been trying to get the Fed to cut interest rates more aggressively. He's cajoled, complained, and basically done everything short of sending Jerome Powell a singing telegram.
The Fed has budged a few quarter-point cuts. But Trump wants rates at least 3% lower by the midterms.
Meanwhile, the markets are getting shaky. The AI bubble that's been holding up the entire stock market is starting to look suspiciously fragile.
Crypto also proves this market fragility daily. When things go south, they go south viciously, in a correlated manner, and nothing seems to worry Trump more than a weak stock market. It is his most important “poll.”
So a new Fed Chair will take control of the narrative shortly after Christmas. Some ask, “what’s the big deal?” Think of it like this: you have a departing CEO who's being conservative, and the incoming CEO who's already in the building telling everyone, "Don't worry, once I'm in charge, we're ramping spending 10-fold and doing Vegas-style accounting!"
Never in the history of America has anyone tried to completely disintermediate the actual Fed with a shadow Fed. Never have bond markets had to discount two Fed chair narratives simultaneously.
The White House playbook: lower rates, cheaper mortgages, housing refinancing boom, $2,000 “stimies”, money floods back into stocks, crypto, and whatever other risk assets people are gambling on, people feeling richer, and Trump looking like a genius right before the midterms.
The dollar weakens. Global fiat weakens. Inflation may come back with a vengeance, but nobody's going to care about PPI and CPI numbers anymore because we're too busy enjoying record markets and reflating our way out of that $600 trillion global debt problem.
Detractors will scream that the Fed is supposed to be independent, and that you shouldn’t just install a hype man to undermine the current chairman and start shadow-governing monetary policy from the sidelines. But then again, we live in weird times. A shadow Fed chairman speaking counter to the actual Fed chairman would be like having two captains steering the same ship in opposite directions while everyone on deck places bets on which iceberg we hit first.
Will it work? Who knows! Market psychology is a strange beast. We are about to get Fed policy by proxy, economic stimulus by suggestion, and monetary policy by meme.
Welcome to the shadow realm. The popcorn is inflation-adjusted.
Sources:
@federalreserve, @SenWarren, @USTreasury, @SecTreasuryofUS, @realDonaldTrump, @MikeCrapo, @saylor, @fundstrat, @zerohedge
BREAKING: The mass fraud CONTINUES in Tim Walz's Minnesota as a 77th person named "Ousman Camara" was charged for fraud, bribery and money laundering
