Is the Fed Resolute in This Game of Chicken? Tuesday, November 8, 2022

Doug Noland and Michael Oliver return. The Federal Reserve has led America and the post-1971 world to the brink of global bankruptcy. It has led the world to this brink of disaster by papering over one credit cycle after another. It has never really allowed the deflationary process to completely wash excesses of debt and mal investment of the past so that new healthy balance sheets could reemerge and an age of egalitarian capitalist prosperity could take hold again in America and beyond. Instead, it has reduced short term pain by bailing out failed companies, keeping them on life support, denying productive capital to be employed in creating “economic green shoots.” Crony capitalism has enriched a ruling elite who now uses the powers of government to deny competing ideas out of the public square and honest capital from competing against their monopolies. Given an absence of productive capital, natural laws of economics require a higher rate of interest to reach equilibrium which the Fed has so far reluctantly allowed to take place. But with a return to honest market-driven interest rates, the Zombie companies and the millions of Americans that rely on them for life support are starting to squeal in pan as they plan to charge the Fed with torches and pitchforks. Will the Fed have the resolve to allow natural market forces to prevail or will it chicken out as the elite who created it in the first place applies pressure? Or, owing to the fragility of the existing over-indebted economic system, will an earthquake in the financial markets and economy force the Fed’s hand in either entering an even greater QE or go along with the World Economic Forum in engineering a new global currency that replaces the dollar? No one is more focused on the day-to-day global market dynamics than Doug, so we will ask him for his views on those questions and more. Michael will provide his usual astute momentum and structural analysis of key markets starting with the precious metals.