Is Trump Escalating Trade Wars To Force Fed Rate Cuts?
Lately it almost feels as if whoever is making the decisions in the U.S.
government is actually trying to crash the markets.
Because as the world continues to decouple from the dollar at a rapidly
accelerating rate, the U.S. actions are so economically destructive and
bizarre, that it becomes harder to believe that someone would actually think
this could in any way help an economy.
In the past few weeks, President Donald Trump has called for 1% interest
rate cuts by the Fed, escalated the trade war against China, started new
trade wars against Mexico and India, and still had time to fast-track a plan
to sell guns to the middle east.
Meanwhile, foreign trading powers (and former U.S. treasury buyers) have
given every indication that they have no plans to back down.
A recent ZeroHedge report suggests that China and Russia have been conducting
joint military exercises while further “developing bilateral payments in
national currencies”.
While the news out of Russia showed further progress towards creating new
non-dollar financial infrastructure.
The Kremlin released a draft decree on Wednesday outlining “settlements
and payments for goods, service and direct investments between economic
entities of the Russian Federation and the People’s Republic of China are
made in accordance with the international practice and the legislation of the
sides’ states with the use of foreign currency, the Russian currency (rubles)
and the Chinese currency (yuan).”
According to the draft, Moscow and Beijing will cooperate to develop a
national payments system, along with cross-border payments in national and
other currencies.
“The sides deepen the cooperation in the field of national payment card
systems and within the framework of the Russian and Chinese legislation
provide support to commercial banks in their independent decision-making on
joining the payment system in the state of the other side,” reads the
document.
Last November, Russian Prime Minister Dmitry Medvedev said that
discussions were under way to allow the use of China’s UnionPay credit card
in Russia, and Russia’s Mir card in China.
“No one currency should dominate the market, because this makes all of us
dependent on the economic situation in the country that issues this reserve
currency, even when we are talking about a strong economy such as the United
States,” Medvedev said last year.
“I want to say something that may raise a few eyebrows, but I think some
of these [US] sanctions are good or useful because they forced us to do what
we should have done 10 years ago,” he added.
It seems more and more clear that the world has noticed the reckless
actions of the U.S. government and Federal Reserve, and are running out of
patience.
The Fed has wildly expanded the money supply in the last decade, and in
the face of all that’s happening, what was their latest response?
After introducing an idea called the “maturity extension program” in the
Fed’s May meeting minutes (which sounds eerily similar to quantitative
easing), numerous Fed officials were out this week talking about the
possibility of rate cuts.
While Fed Chairman Jerome Powell unleashed confirmation that the QE that was
promised as temporary, is not only here to stay. But that it’s now policy
going forward as well.
“Perhaps it is time to retire the term “unconventional” when referring to
tools that were used in the crisis. We know that tools like these are likely
to be needed in some form in future ELB spells.”
The world is rapidly realizing that the U.S. government and the Fed do not
actually have an exit plan. Maybe they never had a plan at all. Or maybe the
plan was just to loot as much money from the system as possible before
allowing it to crash again.
In either case, whether the mainstream and Wall Street media ever
acknowledge the obvious and inevitable, the signs are there for anyone who
chooses to look. Similar to how they were there prior to the last market
crash.
So while Wall Street continues its pavlovian response to the U.S. dollar
and treasury markets as a so-called “safe haven”, you’re not imagining what
you’re seeing. And fortunately it is still possible to position yourself in
advance of what’s to come.
As always, if you have any questions about this article you are welcome to
contact me here. And hopefully this post can be of value in helping you
navigate this stunning shift in the world.
Chris Marcus
