A Mutiny is Underway at the Fed
Over the last few weeks, I’ve been building a case that the Fed and President Trump are at war with one another.
To review, the basic outline is as follows:
- The Fed participated in the Deep State’s coup against President Trump, intentionally hurt the U.S. economy and the U.S. stock market by aggressively hiking interest rates and shrinking its balance sheet by $600 billion.
- President Trump caught on to this scheme in late 2018. Since that time, he has been planning his revenge – bullying the Fed in to easing policy again, with the ultimate goal of eventually taking over the Fed by designating the control of the U.S. dollar as a matter of national security.
Regarding #2, most recently President Trump has suggested demoting current Fed Chair Jerome Powell if the latter doesn’t begin easing monetary policy soon.
And as of late last week, there is now a frontrunner to replace Powell as Fed Chairman.
A Frontrunner to Replace Fed Chair has Emerged
His name is John Williams. And he is the president of the New York Fed, the branch of the Fed in charge of market operations (controlling interest rates).
In case you missed it on Thursday of last week, Williams appeared in the media to state that the current “neutral” rate is 0.5%.
The neutral rate is the Fed’s ideal target for interest rates to ensure economic growth and minimal inflation.
And Williams, the man in charge of part of the Fed that controls interest rates, said it’s 0.5%.
By the way, the Fed currently has interest rates at 2.25-2.50%.
Meaning, Williams is saying that the Fed needs to cut rates an incredible 2% to reach its interest rate goals.
Put another way, the Fed needs rate to go to almost ZERO and in a hurry.
This is truly incredible.
Just last week, Fed Chair Jerome Powell emphasized that the Fed didn’t necessarily need to cut rates – at all.
This wasn’t last year or last month. This was LAST WEEK.
And Williams’ statement is especially jarring because the “neutral rate” has been Fed Chair Powell’s obsession ever since he took the reins at the Fed.
Throughout 2018, Powell stated time and again that the Fed would raise interest rates until they reached the neutral rate.
He literally stated that this was the single most important goal for the Fed during his 2018 congressional testimony.
Mind you, he also claimed the Fed’s neutral rate was somewhere around 3% or so.
And now, at a time when Powell’s job is in jeopardy with President Trump, here comes NY Fed President John Williams stating that Powell was wrong by over 2% and that the Feds needs to cut rates to basically ZERO.
Williams is clearly positioning himself to replace Fed Chair Powell when the latter is demoted by President Trump.
A Well-Timed Strategy for a Fed Takeover
What John Williams did was send a message to the President: “If you’re looking for a Fed Chair who will cut rates to ZERO, I’m your man.”
This is yet more evidence that the President is planning something BIG for the Fed.
It is one thing for President Trump to suggest demoting Fed Chair Powell. But it’s something else entirely to see a top Fed official publicly throw Powell under the bus like John Williams just did.
The fact that Williams did this right before the Fed goes into its blackout period before its July meeting only adds to the significance of his statement. (The Fed typically bars its officials from making any public statements the week before a major policy decision is made.)
In this context, Williams seems to be suggesting that if Jerome Powell doesn’t deliver the week after next, he’s more than happy to step up as a new Fed Chair willing to cut rates at the President’s directive.
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Editor, Money & Crisis