The War for the Dollar is Already Over Part I


    by Tom Luongo, Tom Luongo:

    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?”

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    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:

    The Fed is now ready, I think, to go to war with Davos over the future of money and they aren’t ready to hand over the keys to the candy store to a bunch of European commies, at least while also cutting Wall St. out completely of the New World Order…

    …The plan {Davos’} is pretty obvious at this point: hand over the keys to capital formation to the central banks and destroy all risk assessment. Commercial banks aren’t needed.  Only socially acceptable projects going forward will get funded. This is what Christine Lagarde wants with her new all-European Green Stock Exchange she introduced at Ankara last week.

    But what’s clear to me now is that Davos went for the boob too fast on Prom Night at the Eschaton.  It’s too much, too soon and the acceleration is exposing its flanks.  Why would China and the U.S. go to war over COVID-19 and trade issues when they are being manipulated into it by a bunch of feckless Eurocrats with delusions of adequacy?

    It was the possibility that the Fed, who ultimately answers to US commercial banking interests, is pursuing its own agenda that I explored in a recent podcast with Danielle Dimartino Booth, hoping to get her perspective on this widened lens of Fed policy rather than just focusing on inflation. In my opinion, Danielle more than delivered.

    One of the biggest complaints about the Fed’s policies since the 2008 financial crisis has been that it has acted as the Central Bank of the World, rather than the Central Bank of the US. What I find hilarious, honestly, if not a little pathetic, is that the moment the Fed starts acting like a domestic central bank, the wailing and gnashing of teeth comes from all corners.

    I expect that from globalists and vultures who love taking the Fed’s zero-cost dollars and levering them up to feather their own nests to build their own private empires in the shadow banking system. I didn’t expect that from the alternative economics space, however.

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