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Trump Is Ready for a Big Push
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Trump Is Ready for a Big Push

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Reuters/PrtSc

WASHINGTON, DC – July 26, 2018

Trump continues his work by clearing the political landscape from the debris left behind from the liberals who have dominated American politics in recent decades. Trump came to power as a representative of specific political forces focused on fixing key sections of the US economy, but these forces are still poorly represented in the Government and media. This is due to the fact that the managerial and educational structures of the US have been under the control of bankers and financiers for several decades, forces which privileged the interests of international finance capital over ordinary people. However, this model of the world economy based on the control of transnational banks and the dollar is no longer feasible. It simply no longer provides economic growth. We are now witnessing the biggest economic crisis since 2008. This crisis was partially dampened by pumping new money into the economy, but this only delayed and deepened the problem, now it is obvious to everyone. To change this situation, it is necessary to change the model of economic development. That's why Trump decided to enter into politics. Nonetheless, he can't change the model without making structural changes to the system itself. This is why he has garnered the hatred of the media and has been sabotaged by the deep state.  However, despite the anti-trump campaign, he continues to clean the Augean stables. The most important point (the center of the confrontation if you like) for the Trump administration is to reestablish a firm control over the Fed. Away from the dictatorial “independence” of the Rothschild & Soros financial hyenas & pirañas and toward large low-interest investments in the real economy, in real economic infrastructures.

The Fed is a leader in pushing stringent regulation on the nation. Following the passage of the Dodd Frank Act in July 2010, the Fed was given enormous power to regulate the banking industry, including setting limits as to how big an individual bank could be; determining how much money the banks had to invest in fed funds and Treasurys as a percent of their assets; which loans were desirable and which were not; where the banks had to obtain their funding and many, many, more rules up to and including how much a bank could pay its investors in dividends.  Thus, of all of the government agencies, the Fed has been possibly the most restrictive. The president has already moved to correct these excesses by putting in place a new Fed Governor (Randal Quarles) to regulate the banking industry. Next step is to take full control of the Federal Reserve. He should and will do both because he can and because his broader policies argue that he should do so.

The Board of Governors of the Federal Reserve is required to have seven members. It has three. Two of the current governors were put into their position by President Trump. Two more have been nominated by the president and are awaiting confirmation by the Senate. After these two are put on the Fed’s board, the president will then nominate two more to follow them. In essence, it is possible that six of the seven board members will be put in place by Trump.

The Federal Open Market Committee has 12 members and sets the nation’s monetary policy. Seven of the 12 are the members of the Board of Governors. Five additional are Federal Reserve district bank presidents. Other than the head of the Fed bank in New York, who was nominated by the president, the other four can only take their positions as district bank presidents if the board in Washington agrees to their hiring. One of these, the Fed Bank president in Minneapolis, Neel Kashkari, is already arguing for no further rate increases.

And this is not just words. The issue of the key rate is of paramount importance for the economy. In the second quarter of 2018, the growth in non-seasonally adjusted money supply (M2) has been zero. This is because the Fed is shrinking its balance sheet ultimately by $50 billion per month. In addition, the Fed has raised interest rates seven times since Q4 2015. Supposedly there are five more rate increases coming.

The thing is that high-interest rates create problems in exports, facilitate imports and discourage investment in the real sector. Of cause, if the United States could close its borders to stop import, as it was in the 20s-30s of the last century, the rate would not play a role (all participants have the same rules of the game). But for such a scenario to become reality, you have to destroy not only the WTO but the entire Bretton Woods system, with the US dollar as a consolidated measure of value in the modern world economy and its mandatory freedom of capital movement.

In fact, there are only two scenarios of economic development: the first one is saving the world dollar system at the expense of industry and the US real sector in General. The second scenario is to save the US economy through the destruction of the Bretton Woods (global dollar) system.                                        

The political and economic groups which privileged the interests of international finance capital are in favor of the first scenario and are interested in a rate hike.

Donald Trump and the forces behind him are going to act on the second scenario. It's a tough, thankless, and lonely job.  And, of course, even the President of the United States is not in a position to do so at once. But the overall direction in which he is going to move is clear.

Sooner or later the president can and will take control of the Fed.  The law was written creating the Federal Reserve the secretary of the Treasury was designated as the head of the Federal Reserve may be repealed. We are going to return to that era. Like it or not the Fed is about to be politicized.

Author: USA Really