Can the US Feds Really Prevent an Inevitable 2022 US Stock Market crash? At first, this question may seem rhetorical, as it surely seems as if US Central Bankers have wielded absolute control over US stock markets by artificially pumping them higher for thirteen consecutive years. From this perspective, how can the Feds not wield absolute control over US stock market behavior, right? Well to put this perspective in a wider context, let’s inspect the 2008 global stock market crash during which the S&P 500 eventually shed more than 50% in valuation, starting in April 2008. Back then, on my news site, I published on 23 April 2008, an article I titled, “Will US Markets Crash Now or Later?” in which I was so sure that an impending crash was coming against the tide of popular belief back then that my contrarian take on the future of US stock markets triggered many ad hominem attacks, including many that mocked my take by stating that they would continue to get rich off of US stock market rises while I had stupidly cashed out.
Through the distorted lens of today’s dominant narrative, many people mistakenly remember events incorrectly from back then, falsely believing that it was a Fed’s increase in interest rates that triggered global stock market crashes in 2008 in all of the world’s largest markets. Instead, the reality was that the Fed Funds interest rate had already been slashed to just 2.00% when I made my prediction of an imminent US stock market crash in April 2008, and despite Chairman Ben Bernanke panic slashing, not raising, interest rates from 2.00% to zero by December 2008, this did not prevent the US S&P500 from suffering one of its worst crashes in recent history from 1440.24 on 19 May 2008 to 666 by 6 March 2009, a staggering crash of 53.75%. Now, despite the narrative (a very non-credible one in my opinion, that the Feds will raise interest rate five to seven times this year), the dominant narrative is that somehow the Feds will still be able to keep US markets propped up.
In fact, the best way for the Feds to exercise their power to control the future behavior of US markets would be to rapidly increase interest rates seven times this year, a policy decision that would all but guarantee a massive US stock market crash. Furthermore, though a Fed Funds interest rate of 5.25% seems unfathomable today, as such an interest rate would likely cause a crash in the US stock market in excess of 90%, this was the interest rate that existed at the end of June 2006. Thereafter, then US Fed Chairman Ben Bernanke aggressively started slashing interest rates nearly from the moment he started his tenure as US Central Bank Chairman until I issued my prediction of an imminent US stock market crash in April 2008 when the Fed Funds rate stood at just 2.00%. So despite panic slashing interest rates to zero in six-and-a-half months, the US Central Bank could not prevent the US stock market from crashing, and could not even revive it for three additional months after they established the Fed Funds rate at an absurd zero to 0.25%, a rate that still stands today.Consequently, though most people’s memory of the 2008 crash has now been sterilized by the mass financial media, a US stock market crash still materialized in 2008 despite the best efforts of the Plunge Protection Team (PPT) and the President’s Working Group on Financial Markets, two teams specifically created by past US Presidents to prevent free markets from working and from stock market crashes from happening after the Black Monday crash of 19 October 1987. In fact, most people falsely believe that the mission of the US Central Bank is to continually prop up stock markets, when in fact, the US Central Bank from time to time deliberately creates stock market crashes to destroy the wealth of the serfs that managed to ride their artificially created wage higher but never seem to understand the time to exit as well.
Thus, just as US President Thomas Jefferson wrote in 1787: “Wonderful is the effect of impudent & persevering lying. The British ministry have so long hired their gazetteers to repeat and model into every form lies about our being in anarchy, that the world has at length believed them, the English nation has believed them, the ministers themselves have come to believe them, and what is more wonderful, we have believed them ourselves. Yet where does this anarchy exist? Where did it ever exist, except in the single instance of Massachusetts? And can history produce an instance of rebellion so honourably conducted? I say nothing of it’s motives. They were founded in ignorance, not wickedness. God forbid we should ever be twenty years without such a rebellion. The people cannot be all, and always well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive.”(Editor’s Note: This strategy has been undertaken by the oligarchs in 2020- 2022 to implement Covid lockdowns based upon complete propaganda and ignorance. Today mass compliance to the oligarchs, NOT rebellions, are founded in ignorance.)
“If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty. We have had thirteen states independent [for] eleven years.There has been one rebellion. That comes to one rebellion in a century a half for each state. What country before ever existed a century and a half without a rebellion? (Editor’s Note: The United States, Canada, nearly the entire Asian continent, Australia, NZ and multiple nations in the EU in 2022) And what country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms. The remedy is to set them right as to facts, pardon and pacify them. What signify a few lives lost in a century or two? the tree of liberty must be refreshed from time to time with the blood of patriots & tyrants. It is its natural manure.”
In conclusion, buyer beware. I realize thirteen years is a long time frame from which to draw a conclusion about the omnipotence of US Central Bankers to control the share prices of US stocks and they still have the same mechanisms at their disposal, such as buying stock market index futures prior to market open to prop up markets. However, there always comes a time when the chickens come home to roost and that which was controllable for an irrational length of time becomes uncontrollable. And in my humble opinion, we are approaching a similar situation in 2022 to that which developed prior to the 2008 global crash – that no matter what efforts are undertaken by US Central Bankers, the PPT and the President’s Working Group on Financial Markets, US stock markets will crash, and crash worse than they did in 2008 – especially since they no longer even can deploy slashing the Fed Funds interest rate, as it is not currently 5.25% now but 0.00% to 0.25%. Consider this article to be a follow-up to my recently published article, “It’s Just a Question of When.”
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The correct response is indeed raising interest rates but the Fed CAN’T do it. The U.S. debt load plus interest would be astronomical (it already will never be paid). Therefore, despite the rhetoric, they will renege on any significant interest rate hikes and keep attempting to inflate the debt away. This may indeed keep the stock market propped up a bit longer.