September 26, 2018 | Fed’s Decision was Unanimous! What Else?

The interview with Mr. Jerome Powell, Chairman of our Fed, reveals a few nuggets to think about. First of all, his vision of our economy is much different from mine. Jerome views our low unemployment rate, low inflation rate, and our 3% growth rate as indicators of a strong economy for now and the immediate future. He see’s no real problems (in the data) which could derail the trends currently present.

It was interesting to listen to Mr. Powell, however. He did reveal that the ‘dollar’ is not his responsibility. The ‘dollar’ is the responsibility of our Treasury Department, says Powell, and not the Fed. This means that issues like the price suppression of gold (to promote dollar sentiment) would not fall within his purview. He also stated that the issues with our national debt do not fall within the responsibilities of the Fed. Fiscal policy is not his concern even though he is aware of our growing debt issues.

Mr. Powell appears to be a technician who will use the Fed tools to maintain stability in the domestic economy (mostly). His view of emerging markets (and their economies) is less of a concern than the continuing growth within our domestic economy. All this was interesting to know for my predictions of where our markets are going. My main concern today is the continuing increase in general interest rates for our real estate markets. Powell does not view this market as a problem as of today.

Mr. Powell see’s affordability as strong and better than in 2007-08. He does not sense that real estate values might decline anytime soon. I would challenge this view of our Fed Chairman. I see the rising rates as seriously detrimental to affordability and to a continuing rise in values. My sense is that real estate ‘values’ have peaked and will now start to decline in most markets. The decline could accelerate as rates continue to increase. By 2019, we could see a real slow down in housing and then declining values.

Mr. Powell’s view of emerging markets is also not my view. I see the higher interest rates as directly slowing down most emerging markets globally. All this will be telescoped into real-time by early 2019. Real estate prices will start to decline, borrowing will dry up, consumer confidence will turn negative, and our stock markets will then decline rapidly. A serious stock market correction is coming in 2019 IMO. Mr. Powell does not seem to hold this view and I doubt that any of his advisers hold this view.

Will our Treasury continue to allow our deficits to grow exponentially. As I write today, our national debt is growing rapidly and our deficits are growing rapidly. Witness: http://www.usdebtclock.org. The portion of spending for ‘interest payments’ is growing very rapidly as our Treasury must refinance their bonds daily. This situation will become ominous by early 2019. Mr. Powell may not be concerned with these issues but our economy will feel the effects IMO.

With respect to gold and silver prices, I see our Treasury Department as continuing to suppress these prices so as to support our digital dollar. The Exchange Stabilization Fund is probably the culprit in this continuing price ‘suppression’ scheme. I don’t think that Mr. Powell or his Fed is behind the price suppression of gold and silver. Our Treasury Department, however, is directly behind this price suppression IMO. Until our economy crashes to ashes, I presume that price suppression of silver and gold will continue.

As I write silver is around $14.42 and gold around $1200. These prices will likely remain within cents of these levels for sometime. Our Exchange Stabilization Fund can use a trading ‘algorithm’ to maintain this price level indefinitely. As I have stated many times, price suppression is easy now that a trading ‘algorithm’ can be programmed to trade silver and gold within our electronic futures markets. The underlying ‘source code’ which gives the ‘algorithm’ its instructions is private information (hidden from the purview of all investors and traders).

To change this price suppression scheme of our Treasury Department will require that Mr. Trump and/or his Treasury Secretary change their policy on gold and silver suppression. This change in policy is unlikely as our authorities now desire digital money (a cashless world) for our planet. Expect continuing price suppression of silver and gold and expect our mining companies to start declaring bankruptcy as their profits disappear in the coming months and years. I see this happening now to some extent. It could accelerate in 2019 (unless our markets totally crash and burn).

Price suppression of silver/gold could change if our markets crash. Investors will then wake-up to the imaginary nature of our digital world of currencies. As of today, almost every investor and trader views digital money units as objective reality. I view these units as pure fiction and fantasy. But none of this will surface until a major crash in the markets occurs. The Powell Fed is setting the stage for a crash in 2019 IMO. This seems obvious to me. Only ‘time’ will reveal if my perception is correct!

Think for yourself and prepare if you agree. I buy silver/gold as ‘insurance’ and I am ignoring the price. Enjoy! I am: https://kingdomecon.wordpress.com.

Don Swenson September 26th, 2018

Posted In: Kingdom Economics

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