How Long Before the Fed Unleashes the Next Wave of Hyperinflationary QE?
June 18, 2019 (EIRNS)—The Federal Reserve is holding its monthly meeting June 18-19, and there is a major campaign underway in the financial media to pressure the Fed to quickly revert to quantitative easing, lowering interest rates, and so on. This insane hyperinflationary policy, in the eyes of Wall Street and the City of London, the only instrument they have at hand to forestall another major blowout of the trans-Atlantic financial system.
Typical of the pressure campaign, an article in today’s MarketWatch stated that
“A surprise interest-rate cut by the Federal Reserve could be its best decision.... In terms of the taboo against surprising markets, what’s so bad about a good surprise? Isn’t a surprise an effective way to get the biggest bang for one’s buck?”
The article then stated that “A rate cut this week is an unlikely outcome,” in part because “they are reluctant to front-run the G20 meeting later this month and the remote possibility of a resolution of the U.S.-China trade war.” But a rate cut is coming soon, they stated hopefully.
European Central Bank President Mario Draghi is also issuing statements promising as much quick and easy money as needed.
The background to these developments is that, what has been going on over the last few years is that the ECB was taking the lead in global QE, while the U.S. Fed tried to taper. But that is now ending and the Fed is about to rejoin the hyperinflationary binge. Set against this growing, accumulated QE since 2008, total world derivatives first dropped sharply from a high of an estimated $1.5 quadrillion in 2013 down to about $1.1 quadrillion in 2016 (the tapering period) and have only increased slightly since then, to under $1.3 quadrillion in 2018.
In other words, the global financial system is in the breakdown stage described by the third variant of Lyndon LaRouche’s famous “Triple Curve”/Typical Collapse Function pedagogy of 1996, where he demonstrates even rising rates of monetary aggregate expansion are unable to keep the speculative bubble of total financial aggregates from contracting. In other words, the major international financial institutions are having to run faster just to stay in the same place. This is a sure indication of a level of overall insolvency that points towards an inexorable blowout, as we have otherwise been reporting.