It’s looking increasingly likely that the US Federal Reserve and the globalist powers that be will use the dramatic rising of inflation as their excuse to bring down the US financial markets and with it, crash the greatest financial bubble in history. The enormous inflation rise since the malicious political lockdowns and the trillions of dollars in emergency spending by both Trump and Biden, coupled with the continuation of the Fed’s unprecedented near-zero interest rate policies and asset purchases of billions in bonds to keep the bubble inflated a bit longer– have set the stage for an imminent market collapse. Unlike what we are told, it is deliberate and managed .
Supply chain disruptions from Asia to normal truck transport across North America are feeding the worst inflation in four decades in the USA. The stage is set for the central banks to bring down the debt-bloated system and prepare their Great Reset of the world financial system. However this is not an issue of inflation as some mysterious or “temporary” process.
The context is key. The decision to crash the financial system is being prepared amid the far-reaching global pandemic measures that have devastated the world economy since early 2020. It is coming as the NATO powers, led by the Biden Administration, are tipping the world into a potential World War by miscalculation. They are pouring arms and advisers into Ukraine provoking a response by Russia. They are escalating pressures on China over Taiwan, and waging proxy wars against China in Ethiopia and Horn of Africa and countless other locations.
The looming collapse of the dollar system, which will bring down most of the world with it owing to debt ties, will come as the major industrial nations go fully into economic self-destruction via their so-called Green New Deal in the EU, and USA and beyond. The ludicrous Zero Carbon policies to phase out coal, oil, gas and even nuclear have already brought the EU electric grid to the brink of major power blackouts this winter as dependency on unreliable wind and solar make up a major part of the grid. On December 31, the “green” new German government oversees the forced closing of three nuclear power plants that generate the electricity equivalent of the entire country of Denmark. Wind and solar can in no way fill the gaps. In the USA Biden’s misnamed Build Back Better policies have driven fuel coats to record highs. To raise interest rates in this conjuncture will devastate the entire world, which seems to be precisely the plan.
The Fake US Inflation Data
Ever since the early 1970s when President Nixon asked his pal, Arthur Burns, then head of the Federal Reserve, to find a way to get rid of politically damaging consumer inflation monthly data that reflected soaring oil prices along with grain, the Fed has used what they called “core inflation” which means consumer price rises MINUS energy and food. At the time energy made up a significant 11% of inflation data. Food had a weight of 25%. Presto by 1975 a 400% OPEC rise in oil prices and a 300% global grain price rise owing to harvest failures in the Soviet region, “core inflation” fell significantly. This, despite the fact that American consumers had to pay far more for gasoline and bread. Very few real people can live without energy or food. Core inflation is a scam.
By 1975 the Burns Fed had eliminated major costs of housing and other factors leaving a Consumer Price Index that was a mere 35% of the original basket of commodities measured. By then real everyday inflation was out of control. In the real world, USA gasoline today is 58 percent more expensive than in 2020 and over the last 12 months, food prices have gone up by more than 6 percent on average. Today the US Consumer Price Index does not include the cost buying and financing houses, and also not of property taxes or home maintenance and improvement. These factors have been soaring across America in the past year. Now all that is lacking is a statement by the Fed that inflation is more alarming than they thought and required aggressive rate hikes to “squeeze inflation out of the system,” a common central bank myth made dogma under Paul Volcker in the 1970s.
The Bloated US Stock Market
Wall Street markets, today with stocks at historic bloated highs, aided by near zero Fed rates and $120 billion of monthly purchases by the Fed of bonds as well, are at a point where a policy reverse by the Fed, expected now in early 2022, could begin a panic exit from stocks to “get out while the getting is good.” That in turn will likely trigger panic selling and a snowballing market collapse that will make the recent China Evergrande real estate and stock collapse look like nothing at all.
Since the global financial crisis of September 2008, the Federal Reserve and other major central banks such as the ECB in the EU and Bank of Japan have pursued unprecedented zero interest rates and often “quantitative easing” purchases of bonds to bail out the major financial institutions and Wall Street and EU banks. It had little to do with the health of the real economy. It was about the largest bailout in history of brain dead banks and financial funds. The predictable result of the Fed and other central banks’ unprecedented policies has been the artificial inflation of the greatest speculative bubble in stocks in history.
As President, Donald Trump constantly pointed to new record rises in the S&P 500 stocks as proof of the booming economy, even though as a savvy businessman he knew it was a lie. It was rising because of the Fed zero interest rate policy. Companies were borrowing at low rates not to expand plant and equipment investment so much as to buy back their own stocks from the market. That had the effect of boosting stocks in companies from Microsoft to Dell to Amazon, Pfizer, Tesla and hundreds of others. It was a manipulation that corporate executives, owning millions of their own company shares as options, loved. They made billions in some cases, while creating no real value in the economy or the economy.
How big is today’s US stock market bubble? In October 2008 just after the Lehman crisis, US stocks were listed at a total of $13 trillion capitalization. Today it is over $50 trillion, an increase of almost 400% and more than double the total US GDP. Apple Corp. alone is $3 trillion.
Yet with massive labor shortages, lockdowns across America and huge disruptions to trade supply chains especially from China, the economy is sinking and Biden’s phony “infrastructure” bill will do little to rebuild the vital economic infrastructure of highways, rains, water treatment plants and electric grids. For millions of Americans after the 2008 housing collapse, buying stocks has been their best hope for retirement income. A stock crash in 2022 is being prepared by the Fed, only this time it will be used to usher in a real Great Depression worse than the 1930’s as tens of millions or ordinary Americans see their life savings wiped out.
Copyright © F. William Engdahl
