Are we being conditioned to embrace an aggressive Fed buying spree?

Never underestimate the US Fed’s ability to support asset prices

I continually come across these types of articles that illustrate a concept we frequently discuss; Never underestimate the US Fed’s ability or desire from embarking on programs that would support asset prices.

The elites need to consolidate as much of the world’s wealth as they can before the next phase of the new world order is implemented. By hoisting assets onto the balance sheets of the central banks these elites gain effective control of these assets.

The Federal Reserve buying stocks? How about financing the federal deficit? Or buying goods?

These were some of the suggestions for combating the next severe recession given to the central bank by former IMF chief economist Olivier Blanchard at the Boston Fed’s monetary policy conference.

There is a general sense the Fed has to re-think its approach to combating recessions given the low-interest-rate environment that is persisting.

Blanchard said the Fed probably has enough tools to handle a run-of-the-mill recession. But if it is another severe recession like the financial crisis, Blanchard urged the central bank to resort to previously unheard of policies.

MarketWatch – Fed should buy stocks if there is another steep recession, former IMF economist says (October 10th)

The next economic downturn in the US

Imagine this scenario; the US economy begins to turn down and zero-bound interest rates are not helping to enhance economic growth. What would the monetary authorities do at that point? I submit that in a dynamic economic environment we must stand ready for any setup, including the most likely one – the situation where the Fed is “forced” to expand it’s QE program and buy assets of all kinds.  Keep in mind, this is not without precedent. The Bank of Japan has essentially been buying everything not nailed down, including domestic stocks.

In his speech at the Fed conference, Blanchard said the size of the balance sheet is not a constraint.

“Yes they are scary. But that doesn’t mean it cannot be done. If we need it, we could clearly double it and nothing terrible would happen,” he said.

At the moment, the Fed can only buy Treasurys and mortgage-related assets.

The best policy would be for the Fed to buy assets with high premiums like stocks, he said.

“This could do the trick and could work even better than buying long bonds,” he said.

If things got really bad, monetary financing of the deficit is something that could work to increase demand, Blanchard said.

“We have this notion that it is only OK for the central bank to buy assets and not goods. But that’s a restriction we imposed on ourselves,” he said.

MarketWatch – Fed should buy stocks if there is another steep recession, former IMF economist says (October 10th)

Asset buying will be the go-to response

I agree with Blanchard’s analysis. As long as inflationary forces stay low, I believe an expanded QE program will be the go-to action in the future. While some at the  Fed say that this scenario is not currently politically feasible, I see it as a very likely outcome when the economy and asset markets turn down again.

We have already seen calls by analysts in the business media for the Fed to loosen up. Many of these individuals are asset bulls and only want to see asset prices increase. Moreover, many in the growing populist movement are attempting to get the central banks to loosen up even more.

After some half-hearted opposition, I see little resistance to an enhanced central bank buying spree. Most myopic investors who would enjoy their growing personal balance sheets would embrace an expanded asset purchase program.  Whether an expanded QE program helps the economy is up for debate. It certainly would lift asset prices, all other things being equal. This, of course, would conflate with the agenda for the elites to consolidate the world’s wealth.

Whether an expanded QE program helps the economy is up for debate. It certainly would lift asset prices, all other things being equal. This, of course, would conflate with the agenda for the elites to consolidate the world’s wealth.

– Chris Pirnak

Could the Dow reach 40,000 after a Fed induced buying spree?

I came across another article titled, Dow 40,000 is coming, but only after ‘a large panic event’ passes, analyst warns, which illustrates a scenario in which a Fed buying program could lift the Dow to 40,000.

Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co., is predicting that after a nasty market and/or economic contraction the Fed could step up and be the catalyst for a hyperinflationary asset boom.

Lamoureux predicts that the stock market could lose a third of its value in the coming year, prompting a “hyperinflation of financial assets at an impressive rate” that ultimately carries the Dow all the way up to 40,000 in the years that follow.

But how, exactly? Lamoureux says the Federal Reserve, which President Donald Trump just described as “loco,” will look to prop up markets.

“The Fed most likely steps up early in 2020 and starts buying shares,” he said.

MarketWatch –  Dow 40,000 is coming, but only after ‘a large panic event’ passes, analyst warns (October 11th)

While I do not necessarily endorse his actual market predictions, I do endorse the most likely outcome he theorizes.

Is this the reason mainstream business is criticizing the US Fed?

Perhaps the mainstream press is criticizing the US Fed for being too tight, because they are conditioning us to embrace an aggressive asset buying spree on par with the Bank of Japan’s program. Perhaps this program is already on tap and its concepts need to be gradually introduced to the populous.

I propose that the likely outcome of rising interest rates and an economic downturn will be a market correction that would force the central banks to step in and begin buying up all sorts of assets. The list could include stocks, bonds, houses, mortgages, skyscrapers, land, businesses, and infrastructure.

If this is the case then the US dollar will once again be the sought-out currency and dollar-denominated assets would be in high demand by global investors. The dollar bears can chalk up another defeat.

So, think about this; the Trump supporters and alt-financial media who are bashing the Fed and who despise the US dollar would end up on the losing end once again – even if they correctly predict an economic calamity.

Of course, the consolidation of the world’s wealth under such a scenario would be breathtaking. But it would fit the agenda for the global financial dictatorship.