Fed One Meeting Away From Creating A Doomsday Market Sinkhole

Fed One Meeting Away From Creating A Doomsday Market Sinkhole

 Brandon Smith 

The effective Federal Reserve funds rate (the EFFR) has been sitting at virtually zero for a long time now. It feels a little strange to think about the fact that it was 14 years ago when the central bank first helped to trigger the crash of 2008 and we are still dealing with the consequences of it today. I only started writing for the liberty movement two years before that. The amount of time that it takes for economic disasters to develop is well beyond the average person’s attention span. In fact, there are many people who are adults today that have no clue what happened in 2008 because they were in elementary school when it went down.

This is how the establishment is able to get away with the negative changes to our national standard of living – because these changes usually happen over the course of decades and almost no one notices.

That said, there comes a point in any financial collapse where the floor is as thin as it will ever get. When the next shoe drops it’s going to break right through along with all the furniture. At this stage there is no slow moving crash, everything goes all at once. We have already seen this scenario in action, and again, I don’t think very many people remember the event.

I believe the Fed will stick with rate hikes this time because they have to at least be seen as “trying” to do something about inflation – the same inflation the Fed themselvescreated through over a decade of fiat money printing and easy credit.

Price inflation will be aggressive this year and going into next year regardless of what the Fed does. Costs are going to rise exponentially for most people. This does not mean that we will be dealing with Weimar-style inflation with wheelbarrows full of Benjamins to buy a loaf of bread’. I’m betting we would see government price controls before that happens (which will trigger mass shortages of goods).

However, it doesn’t take much in terms of price spikes to cause a breakdown. An increase of 50% in overall costs would crush a large number of U.S. households and make them desperate for aid, perhaps in the form of Universal Basic Income and ultimately a complete sea change over to some form of digital currency.

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