Did Janet Yellen make the right decision in delaying a Federal Reserve rate hike? Did the United States dodge a bullet? Of course not.
And the system is on course for a dangerous, hard landing.
As far as many experts can tell, there is no right way or good way out of this crisis under Fed control, and the exit isn’t likely to be smooth or pretty.
Not raising rates means yet another round of QE – QE Round 4 – which will lead to a further strain on the real economy as those on top get continued easy free, while interest rates on investments, pensions, insurance and savings sit at zero, or even go negative, destroying wealth. Derivatives continue to rule the day, and everything remains in jeopardy.
That’s why the Fed will eventually raise rates, at least just a little bit. But it will be too little way too late. The Fed has, in fact, lost control, according to many experts.
USA Watchdog reports:
Financial writer Bill Holter contends the recent announcement of the Federal Reserve not to raise rates means the “Fed Has Lost Control.” Holter explains, “Whatever the Fed does is wrong. The reason I say that is because no matter what they do, they can’t fix what they have already done. There is no policy at this point that can repair where we are at this point as far as debt ratios, derivative outstanding and the money supply exploding. Nothing that they do now can fix it. The only thing that remains is a reset.”
In the reset, Holter contends, “All debt will be impaired. . . . A reset is going to be a shutdown of the system. Everything will stop. When you are talking about bonds being impaired, you are probably going to see that start or begin in the derivatives market. The derivatives is the tail that has been wagging the dog for years. Derivatives are leverage, and you can use that leverage to control prices. … and when they lose control, that derivative chain between bank A, B, C and D is going to snap. When it snaps, the music stops and everything is going to stop.
Thus, the possibility of a collapse is still very much a reality – and may well be imminent.
The only question is, how long can they really keep the bubble alive? And when it bursts, will the Fed and government be able to maintain any semblance of control?
Perhaps they can maintain the illusion for a while longer, but sooner or later, the bubble is bound to burst. When it pops, the consequences for ordinary people could be so severe that the 2008 crisis will bear no comparison. Many people would stand to be wiped out overnight.
Those in the streets who haven’t stuffed cash under the mattress will be lucky if they can get anything out of the ATMs.
Like Greece, there simply won’t be cash. Banks will go on holiday, and bank runs will take their course. Grocery store shelves will go empty and food may not be available.
Once something does break, I don’t think it will take much more than 48 hours for you to wake up in the morning and find that nothing works. Your credit card doesn’t work. Your debit card doesn’t work. You go to your bank and the ATM doesn’t work, and nothing is going to work. The entire financial system will shut down. The reset will be the reopening. It’s not the closure that will kill you, it’s going to be the reopening. In the reopening, everything is going to be revalued.
This is not going to just be a financial problem, but a problem getting things you need to live. Holter says, “These big stores get stocked up every single night. . . . The average store only has food for about two or three days. So, this is not going to just be an issue about you paying your bills. It’s going to break down so badly it is going to be an issue about whether or not you can get food.” (source)
Those who haven’t made preparations or saved assets like gold and silver will be at the mercy of government camps, and their neighbors, who will also be struggling.
“It’s coming… whether this week, this month, or October… it’s coming,” Holter warns.
Let’s hope he and others are wrong and the system is stable enough to hold.
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