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Fed Chairman Powell is caught in a trap; high inflation, interest on the national debt, a stock market bubble about to burst, while “too big to fail” banks are ready to tumble. Powell is desperately trying to manipulate interest rates to keep everything from falling apart.

Powell said Congress needs, “an adult conversation among elected officials about getting the federal government back on a sustainable fiscal path?“

No matter who is elected, forget “an adult conversation.” The cries for the Fed to “do something” will be overwhelming. No matter what Powell does, we’re all going to feel the brunt of decades of irresponsible government.

I subscribe to Richard J. Maybury’s U.S. & World Early Warning Report. Richard explains:

“The Federal Reserve says their decisions are ‘data dependent.’ The term is an admission that they do not act, they react – because they don’t know what they are doing. They are forever being blindsided by their own decisions. See it this way: they do not know what their decisions will cause until they see it.

…. Everybody is always trying to figure out what these people are afraid of at any given moment, so we can get ready for their actions against it.”

Rich Checkan at Asset Strategies Inc. tells us:

“Regardless of whether the Fed cuts, raises, or keeps rates, it doesn’t matter when bad fiscal policy in the long run continues to erode the spending power of the U.S. dollar.”

The result of “bad fiscal policy” is generally a currency and stock market collapse, hyperinflation, government default – and who knows what else.

“The people” must fend for ourselves.

Fend for ourselves??

Citizens must protect our accumulated wealth, lifestyle, and standard of living; despite what is going on around us. Using the available data, we must anticipate what the Fed will do, so we can prepare our strategy.

Friend and expert Chuck Butler constantly warns us in his letter, The Daily Pfennig. He is the best “Fed watcher” I know; his predictions have been very accurate.

DENNIS: Chuck, thank you for your time to help our readers.

I want to unpack the Maybury quote about “data dependent,” speculate on what we should expect from the Fed, and then how we can improve our odds while “fending for ourselves.”

The accuracy of government data is suspect. Maybury adds:

“I have been studying economics for a half century, and can tell you for a fact that he who trusts government statistics shall be known as a fool. Again, all governments lie, always have and probably always will.”

Recently Mish Talk discussed discrepancies in the BLS (Bureau of Labor Statistics) jobs reports, “This report is much worse than the headline number indicates,” concluding:

“Every year the BLS makes major adjustments to the data, then does not revise history. The charade puts a constant spectacle on the monthly jobs reports.”

John Williams at www.shadowstats.com calculates inflation as they did in the Volcker years, comparing it to today’s BLS numbers.

“Charade” is an understatement. Powell’s 2% inflation target would have been 8-10% in the Volcker years.

“Garbage in, garbage out.” Do you feel the Fed is relying on the BLS information in making their decisions? Who benefits most from the phony data?

CHUCK: Dennis, for years, I’ve referred to the BLS as just plain BS… They use hedonic adjustments to arrive at both their jobs and inflation numbers, which skewers everything that comes out…

These make-believe, feel-good adjustments mislead the U.S. consumer into thinking inflation is being whipped. The Fed uses phony data for its decisions. In most cases, the phony numbers lead to lowering interest rates making the government and Wall Street happy.

Inflation is a hidden tax on consumers… Not only do you have state and local taxes, and federal taxes, but also hidden inflation taxes.

Here’s my point:

“The most important thing to remember is that inflation is NOT an act of God, that inflation is NOT a catastrophe of the elements or a disease that comes like the plague. INFLATION IS A POLICY.” — Ludwig von Mises

“Inflation is a quiet but effective way for the government to transfer resources from the people to itself, without raising taxes.”— Thomas Sowell

The phony BS jobs number… it’s a real shame – when the Gov’t does revise numbers that were previously released headline numbers, they do it under the cover of darkness. The markets generally ignore the revisions, even though they may paint a bad picture.

Who benefits from these phony numbers? It’s political – misleading the public into thinking things are better than they really are, benefitting Wall Street and the politicians.

DENNIS: While some may blame “Bidenomics,” Trump added many trillions to the national debt. This isn’t a partisan issue; debt has skyrocketed at warp speed since the 2008 bank bailouts. Do you see the government following Powell’s advice, doing anything responsible now, or after the election?

CHUCK: Never! The deficit spending has been like crack cocaine to lawmakers; now they’re hooked and keep demanding more!

The Fed never complained while deficit spending was exploding higher, they enabled it by printing trillions, adding to their balance sheet – rather than forcing the government to borrow in the free market, which would have raised interest rates. Free market rates would have helped put a brake on the outlandish spending.

Why would we expect the government to stop now? The politicians and deep state benefit the most from all the shenanigans the Fed allows.

The Fed could bring things to a head and tell lawmakers that they won’t continue to buy all the bonds that others won’t at current rates, and insist the Treasury Dept stop printing more currency to pay for the bonds. But they won’t…

DENNIS: The Fed is trying to serve several masters, “the people”, banks (their owners) and the government. As Maybury said, we are trying to figure out what they fear the most – at the moment.

Ignoring what we feel they should do; the market focuses on them forecasting three rate cuts before year end. Lots of investors are betting on what they suspect will happen. What do you expect them to do leading up to the election?

CHUCK: Well, three rate cuts before the election would certainly help the current administration. It will be a rally cry for the stock market, of which most people (incorrectly) associate with the economy.

What most people, traders, hedge fund managers, investors, etc. don’t understand is that it has been proven (a fact) that inflation rebounds on its own. If the Fed Heads cut rates too soon, inflation will come back, and with a vengeance. It happened to Paul Volcker.

While rates have held steady, Powell still signals rate cuts ahead. Credit Bubble Bulletin tells us, “Powell and the Fed surely recognize the backdrop, yet they continue to deliver the music Bubble markets are eager to dance to: No more rate increases.”

I recently wrote, The Fed Has an Itchy Trigger Finger:

“Former Treasury Secretary Lawrence Summers criticized the Federal Reserve for continuing to signal that it’s prepared to lower interest rates in coming months, despite a strong economy that’s giving off projections of still-too-high inflation.

‘My sense is still that the Fed has itchy fingers to start cutting rates and I don’t fully get it,…given how the economy and financial markets are performing. I don’t know why we’re in such a hurry to be talking about moving towards the accelerator.'”

If Powell delivers as promised, he will find an excuse to drop rates, creating a much bigger inflation problem for the next administration.

DENNIS: OK, if the Fed does that, what “protective action” do you suggest to counter their actions and protect ourselves?

CHUCK: First of all, make sure you don’t have debt that’s piled up to your eyeballs… A little debt is OK, but none is better!

We’re speeding down the road to financial system collapse; you better have some Gold & Silver – or farmland somewhere where you can have a big garden, and live off the land. Remember, we were still primarily an agricultural society during the last Great Depression. Get out of Dodge so to speak…

The graph below says it all about Gold:

DENNIS: One final question. As Rich Checkan says, no matter what the Fed does, we are about to suffer the result of decades of “bad fiscal policy.” Is there a “lesser of the two evils?” What do you hope for?

CHUCK: I hope a knight in shining armor will ride in on his white stallion, and save the day for us – because the current powers are not going to change our direction.

I hate to sound defeatist, but… with digital currency on the way, the loss of our civil liberties, and privacy, and what I see for the financial system spells Trouble and that’s with a Capital “T”!

The lesser of two evils is still evil! Remember the phrase; Inflate or Die…

Dennis here. We can hope – and still prepare for the worst.

Hyperinflation-strapped Argentina finally elected a true conservative leader who is drastically cutting the size and reach of government. Inflation has already dropped in half.

Argentina’s deep state is pushing back against his reforms; there is still work to be done.

If their knight in shining armor can deliver, we will clearly see a path to “adults” in government serving the people. I’m not selling my gold….
 

On The Lighter Side

Last weekend was full of exciting college basketball with a lot of games going down to the final shot. March Madness extends into April for sure.

We watched the Tampa hockey game Saturday afternoon. In the third period, a Lightning player came skating off the bench and collided, helmet to helmet with an official in the middle of the ice. Both likely had their eye on the puck and didn’t see it coming.

The player had to be helped off the ice and went immediately to the dressing room. The official, Steve Kozari, lay motionless on the ice and it was scary. They brought out one of those wooden stretchers and lifted him up to a roller stretcher and took him off the ice. He was able to move his arms and hands as he was carted off. Jo and I felt a lot better when we saw this report indicating he was in the hospital, and expected to make a full recovery. We sometimes forget how dangerous some sports can be for all involved, including the fans.

Next week is a big one for us. I get my cancer pet scan and treatment and Jo is scheduled for knee surgery. Hopefully all will turn out well.
 

Quote Of The Week….

“You don’t get out of poverty by magic.

You get out of poverty with capitalism, savings and hard work.”

— Javier Milei, President of Argentina
 

And Finally….

Subscriber Robert G. shares some clever sign wisdom:

• A married man’s confession: “I always read my wife’s horoscope to see what kind of day I’m going to have.”
• When I’m bored, I go to the mall, find a great parking spot and sit in the car with the backup lights on.
• If you’re sitting on a public bench when a stranger sits next to you, just stare straight ahead and ask, “Did you bring the money?”
• Sometimes someone unexpected comes into your life outta nowhere, makes your heart race and changes your life forever – like flashing red lights in your rear-view mirror.
• When you do squats, are your knees supposed to sound like a goat chewing on an aluminum can stuffed with celery?
• I don’t mean to interrupt people; I just randomly remember things & get really excited.
• I had my patience tested. I’m negative.

And my favorite:

• If you answer the phone with, “Hello, you’re on the air!” most telemarketers hang up.

Until next time…

More By This Author:

Powell Is Caught In A Trap, But We Don’t Have To Be
The Impossible Dream
We Can No Longer Afford To Ignore Reality