The Secret

The secret is out. It can no longer be denied and it’s up to each and everyone of us to help bring the secret to the forefront of public awareness.

For the mainstream financial media won’t do it, indeed they allow the guardians of the secret to continue to deny its existence.

For years those of us who have been critical as to the negative consequences of easy money policies, QE in particular, were dismissed and mocked as “QE conspiracists” and even as “swashbuckling pirates of free market capitalism” by central bankers directly including yours truly:

It’s easier to mock and ignore with a Tweet and then go into hiding versus engaging in substantive debate.

But the lid just got blown off the false narratives that have been propagated by central bankers from Powell on down with his now infamous claim that “Fed policies absolutely don’t add to inequality“.

Of course QE adds to inequality. Even the Bank of Canada just sheepishly admitted it:

But the real hammer just dropped by one of the most successful investors ever, billionaire Stan Druckenmiller. Not only does QE add to inequality it is the main driver:

“I don’t think there has been a greater engine of inequality than the Federal Reserve Bank of the United States”.

Watch this clip for it lays bare not only the brutal reality of how the Fed has reshaped the country for the benefit of the rich, but also who will pay for the consequences:

The data Druckenmiller is referring to is as obvious as the light of day:

And yet central bankers including former central banker and now Treasury Secretary Janet Yellen, a long defender and enabler of these very policies, keep virtual signaling about the plight of inequality, ignoring any plea to confront the obvious:

The financial media? Silent. Central bankers never get confronted by the glaring disconnect of the data versus the public denials of Fed officials.

Sorry media, but you are all doing a disservice to the public treating all these central bankers with kid gloves and permanent submissive reverence as opposed to being real investigative journalists and asking the hard questions and digging into the data and consequences with follow up. “Independence” does not equate immunity from scrutiny. But that’s how the Fed is being treated by Congress and the media. Unchecked, unbalanced, unquestioned, with absolute power. The very antithesis of a constitutional democracy.

The implications are profound.  While publicly glorified by the media as “heroes” and “saviors” of the economy, the true impact of Fed policy is much more sinister. Inflation, as Druckenmiller rightly points out hurts the poor the most as living expenses take up most if not all of their monthly budgets. That’s of course not the type of inflation the Fed uses as its official guide as CPI as been whittled down to a core basket. And yet Fed officials almost gleefully push for more inflation in their daily speeches. What is this? Open war on the poor who increasingly have issues with accelerating housing and food prices. Increased wages sounds like a welcome reprieve until you realize inflation can easily outpace wage increases and stimulus checks come to an end this year. Then all you got left is higher prices and enormous debt loads. And who will pay for the next bust? The poor of course as Druckenmiller points out.

Glaring and expanding wealth inequality is destructive to society. While there will always be inequality and successful capitalism should rightfully reward those that work hard and come up with great business concepts the artificial exponential enrichment of the few by a “government created agency” (Jay Powell) is not in the purview of the Fed’s mandate. Neither is buying corporate bonds of Verizon and AAPL and other corporate giants as they have done last summer. Some of the very same companies who are still laughing and are back to engaging in record buybacks:

And neither is it a mandate of the Fed to overtly lie to the public as they continue to do. Stretching wealth inequality and the Gini coefficient to ever more extremes the Fed itself is fueling political populism, extremism and a complete lack of trust in the governing institutions of America as discontentment spreads, people looks for blame and find themselves increasingly susceptible to misinformation, a dangerous cocktail for any democracy.

Americans should increasingly question the role of the Fed and its impact on society. It’s not normal, nor should it be, that the economy keeps running from bust to bust to bust and requires ever more debt and intervention to “save it” from the fall out of the asset bubbles the Fed has propagated time and time again. And markets are again, as Druckenmiller has pointed out, in a massive asset bubble as the Fed arrogantly and fanatically insists on continuing the run the biggest QE program in history, despite buybacks at record highs, despite inflations concerns skyrocketing, despite historic valuations, despite the fastest GDP growth in 50 years and despite corporate earnings having fully recovered. If not now, then when? When things slow down? When things suddenly become uncertain again? That’s when the Fed will taper and end QE? Don’t believe a word of it.

Why? Because they don’t stop even when a crisis is long over:

The Fed runs a big operation in obfuscation and denial with the demonstrated track record of enriching the top 1% and many cases the pockets of its own officials, and that is the Ugly Truth:

We know who benefits:

Come on.

It’s way past time that the American public wakes up to this fact.

When will the media confront the daily barrage of Fed speakers or Powell directly about this glaring disconnect? Between what Fed officials deny and what even now billionaires and some central banks openly admit?

I’m not holding my breath, but the best way to shine the light on this most important yet so ignored issue is for us all to speak out and share the secret that is now out in the open. But it must be shared with as many as possible as to build public pressure for accountability and truth, for this Fed currently is subject to neither, and the media keeps giving them a pass. Why?

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Categories: Opinion

74 replies »

  1. Right on the mark as always Sven, but I don’t like our chances if we have to depend on Steve Liesman and the rest of the gutless cowards at cnbc. Remember when 60 Minutes actually was a news program? Scott Pelley…RETIRE!

  2. In 2011 at the bottom of the great recession, the wealth ratio was 40:1 by the looks of the graph. 0.5 trillion to 22 Trillion. Now it’s 38 trillion to 3. just north of 10:1.

    It’s bad for the lower 50% to have gone up 600% when the 1% went up 172%?

    I’m unconvinced.

  3. I wonder what % of the US public understands that the “Federal Reserve” is NOT part of the US government … that it was setup and still is a banking monopoly created by the VERY rich on Jekyll Island, Ga …

    • And let me add …for the BENEFIT of the VERY rich … The Fed is doing EXACTLY what it was created for … WHY is this a surprise to anyone?

  4. The Fed was created FOR the benefit of the VERY rich and is doing EXACTLY what it was created for … Why is this a surprise?

  5. The general public doesn’t understand how any of this market economics stuff works. The media feeds us a diet of repetitive, if hyped, gossip on a daily basis about how one political party or the other is evil. You bought into this, too, Sven, when you criticized Powell for taking orders from Trump. Powell and Yellen are doing the same thing – only moreso – under Biden. How do you explain that?

  6. Well, let’s look at the most simple explanation… Jay Powell has an eight digit million dollar portfolio of equity ETF’s, which has done wonderfully under his leadership of the FED. Why would he not act in his own financial interest when making policy, especially when it also benefits his wealthy friends like his former partners at the Carlyle Group? Can you really imagine him behaving any other way? Seriously America, the minute you wake up and see the deep and pervasive corruption in your financial system, the better… Even so-called investigative journalists at the WSJ or the NYT won’t go anywhere near a story like this, as they don’t want to be cut off from information by their Wall Street pals, thereby perpetuating the institutional corruption in the system..

  7. For this to happen the cockroaches at the Fed would have to admit to themselves that they’re not heroes but in fact villains. Not gonna happen no matter how obvious the lie becomes. The entire economy’s built on lie atop more lies…it can withstand the truth. What’s interest rate suppression via money printing but a big fat ugly lie anyway.


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