by Tom Luongo at Gold Goats ‘N Bullion
And the Fed has won. In the words of Ambassador Kosh from the classic television series Babylon 5, “The avalanche has started. It is too late for the pebbles to vote.”
For nearly the past two years I’ve been a nearly lone voice in the wilderness questioning the financial orthodoxy over the behavior of the Federal Reserve. It started with an innocent, if not openly naïve question back in June of 2021, “Could the Fed actually be getting off the globalist train?”
When I asked that question it was just days after musing to my Patrons on the eve of the June 16th, 2021 FOMC meeting that the Fed would have to step in and defend the US dollar. The dollar’s weakness during the Trump presidency couldn’t last forever. Even then I didn’t have a good answer as to how they would do it.
I just knew, intuitively, that they had to.
Back then there was no indication that the Fed was ready to begin raising rates. But by raising the Reverse Repo payout rate 0.05% above the Fed Funds Rate the Fed started the avalanche of US dollar strength that has persisted through to today.
And the pebbles screaming, “Pivot!” have been consistently overrun by the reversal of flow of US dollars from overseas back home, now getting extinguished at an unprecedented rate.
It was that extreme response by the market to the RRP rate that led to my asking that question. Nothing more, nothing less.
The implications of that question were far reaching. It led to a whole series of questions as to the knock-on effects. I wrote about some of these in the days after the Geneva summit where President “Biden” and Vladimir Putin hashed out a ceasefire over Ukraine. In that article I didn’t get everything right, but the main point, that the Fed was no longer willing to go along with the destruction of the private formation of capital, has more than held true.
Here’s the most important point:…
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