No matter who is elected this November, there will be a recession
before the next President is elected.
This is why we should not lose sight of cause and effect: central
banking. This is true in every major nation and the Eurozone.
Central banks operate domestic banking cartels. These cartels
operate for the advantage of large multinational banks.
The central banks establish the rules of money creation
domestically. This places limits on the banking system as a whole.
When there is a recession, blame the central bank. It establishes
the rules governing the creation of the central economic institution: money.
The public wants a
representative who can be held accountable when bad things happen in the
economy. But most of what happens in the economy happens because of what the
banking system does. The banking system governs the money supply, which in turn
influences interest rates. Interest rates influence the supply and demand for
capital. They tell investors where the highest rate of return is on borrowed
funds.
The voters do not understand
this. So, they look to the one American politician who represents all of the
voters. That means the President.
This is how the system was designed in 1910-13. The central bank
was deliberately structured to present a facade of decentralization: 12
regional, privately owned banks. But policy is set by the Federal Open Market
Committee, which is a representative agency of all the regional branches plus
the President-appointed Board of Governors. It therefore conceals
responsibility. It is a bureaucracy. It is an operationally independent
bureaucracy.
This means that the President
takes the hit when the economy heads south. The Federal Reserve is not blamed.
The public cannot throw the rascals out. It was designed to achieve this goal.
If Hillary is elected, I will blame Janet for the recession. The
same is true if Trump is elected.
The voters will not take this view. They will blame the President.
They will make sure in 2020 that this person is not re-elected. They will make
sure that the political party to which the President belongs is relegated to
minority status in the Senate and probably also the House. The President who is
elected in 2020 will have no meaningful opposition in the Congress. The most
that the minority party can hope for is the ability to filibuster in the
Senate.
We should bear this in mind when we vote in November. The recession
is in the pipeline. The key political question in 2020 will be this: how to get
even with the political party of the President. Sadly, it will not be this: how
to get even with Janet Yellen and the FOMC. There is one way to get even:
repeal the Federal Reserve Act of 1913. The odds are against this.