Will the Fed raise interest rates December 15/16?
Dec 05, 2015
Fed Chairman, Janet Yellen, has been making statements in the past week in preparation of an interest rate hike when the Fed meets on December 15 and 16.
Months ago Lindsey Williams was informed by his “elite” friend that the big boys intended to crash the economy by the end of 2015 after Obamacare was fully implemented.
The so-called “elite” are actually the Babylonian oligarchs who have ruled the West for the past century or more. Since we are now coming to the end of our Babylonian era—which they realize—their intention is to “go for broke” and crash the economy in hopes of setting up a greater dictatorship and retain their power. In their delusions of grandeur, they hope to overcome the God Factor, but the patterns of prophecy were established thousands of years ago in the collapse of the original city of Babylon. We are now in the time of a second collapse, based on the patterns of the first collapse.
This is bad news for Babylon, but good news for the captives in Babylon. We may also take comfort in the fact that Babylon fell intact. There was no great destruction, nor were a lot of people killed by the Persian army. In fact, history shows that Darius and Cyrus, the “kings from the east,” retained most of the government officials in order to maintain a smooth transition. The main difference was that Daniel, the prophet, was put in charge of those government officials.
In my view, we are at the end of the first of three years in which we will see the fall of Mystery Babylon. It began in November of 2014 and should come to a full end by the end of 2017, or possibly by the summer of 2018. (This is 70 years after the Israeli state was established.)
On December 4, 2015 Bill Holter wrote an article that was reprinted by Jim Sinclair. In it he says,
“Can you imagine the Fed talking about raising rates while ENTERING a recession? This is exactly what is happening! The only other time since 1913 where the Fed actually tightened during a business recession was 1937. The tightening collapsed the markets and the economy turned down further…Please understand this, a solvency problem was treated with massive doses of liquidity. Now, seven years later the solvency problem is far worse and the Fed wants to pull liquidity?
“I have to say in my opinion, if the Fed raises rates here they are purposely pulling the plug on the system.”
Janet Yellen is certainly aware that the official government statistics are manipulated and do not truly reflect the reality of American economy. The fundamental problems of an overload of debt and insolvency have not been resolved since the crash of 2008. If anything, the debt has multiplied.
The Fed has pumped trillions of dollars into the system since then with QE to infinity, but this was mainly to help the big banks maintain the illusion of solvency, not to help the average American. Unemployment figures seem to be low, now below 6%, but the labor participation rate is the lowest in nearly 50 years. In other words, a lot of people became homeless in the past seven years, and when they stopped looking for work, they were taken off the list of the unemployed. As their names were dropped, the unemployment figures began to look good again. But the figures are not the unemployment rate, but rather the number of people still getting unemployment checks.
There is a big difference.
Yet Janet Yellen still says the economy is strong enough for a rate hike. Rate hikes pull money out of the economy. Low interest rates historically have created more money, which is inflationary. Higher interest rates reduce the money supply, which is deflationary. The Fed keeps telling us that in spite of infusing trillions of dollars into the economy, inflation is still too low. Their goal is to raise it to 2%. Well, since QE has failed to produce inflation, it appears that they have abandoned that approach and are now ready to do the opposite. The question is this: Will raising interest rates raise inflation to meet their 2% goal? This would have been laughable just ten years ago.
At the same time, the European Central Bank (ECB) is extending its QE program to pump more cash into the European economy. Given that the economies of the nations have been tied together, how will this affect the US economy?
First, it means that the euro will go down in value. Second, when the Fed raises interest rates, the US dollar will go up in value. Investors know this, and so they will be dumping euros and buying dollars. These investors know that if they buy dollars that are going up in value, while at the same time seeing a greater interest-rate yield on their investment, they will make money both ways.
The problem is that the US trade deficit will also increase, because a strong dollar will make it easier for Americans to buy goods from abroad, but other countries will find it more expensive to buy American goods and services. This is why so many central banks try to reduce the value of their currencies. It is to promote exports.
Higher interest rates in America will also make a certain number of debtors go broke. More than half of US auto sales are written as sub-prime mortgages. Such mortgages are meant to allow people who cannot afford new autos to buy them anyway. An increase in interest rates will force a certain percentage of them into insolvency.
The same could be said about home mortgages, which are adjusted every year according to the Fed’s interest rate.
So Bill Holter believes that if the Fed raises interest rates, it will push the US economy back into recession. This is what happened in 1937 when the Fed raised interest rates after the Great Depression. The economy collapsed a second time and did not come out of it until the spending for World War II brought money back into the economy.
Of course, it is possible that Janet Yellen knows something that she is not saying publicly. She may know of a soon-coming injection of liquidity into the system that might come from another source. She may be anticipating a Global Currency Reset, with all of its ramifications, including a return to the gold standard. Time will tell us which scenario is coming.
Dr. Stephen Jones