Weapons of the Deep State, Part 2: Wall Street
“And I sincerely believe with you, that banking establishments are more dangerous than standing armies; & that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” – Thomas Jefferson, Letter to John Taylor, May 28, 1816
“Bubble Finance” makes the new world go ’round.
That “new world” includes rising wealth inequality, alienation of people from government, and “forever war.”
The Federal Reserve System, the central bank of the United States of America, owns the biggest pump. So there is a home-team advantage.
But it’s not one that benefits Main Street.
In fact, like a millstone, Bubble Finance is helping the “new world” grind America’s middle class out of existence.
And we need look no further than the insatiable greed on Wall Street to understand how the Deep State has been able to rob what Donald Trump aptly called Flyover America blind.
What was once the seed for a generation of incredible economic growth — amid existential threats from abroad — is now nothing but a weapon used to oppress and control.
Here, even amid the late stages of the Washington Consensus, the Fed’s policies are helping make the rich even richer, at the expense of the many.
Something terrible is happening in America…
But you’ll never hear about this threat from anyone on the mainstream media, which is why this former D.C. insider is exposing the dirty truth about what’s REALLY going on in Washington… and their secret war on America that could bankrupt millions of retirees in 2018.
Click here for the full details on this shocking story… and find out how you can protect yourself now.
Let’s make a bill of particulars.
In 1962, in the middle of the postwar boom, the bottom 90% and the top 1% each owned about 33% of American wealth.
A gap opened up in the 1980s, closed for a while in the 1990s, but then yawned — bigly — in the 2000s.
In the U.S. today, the top 1% of American households now owns more wealth than the bottom 90% combined… while 41 million Americans receive food stamps and a hundred million aren’t in the labor force.
There’s almost $70 trillion of public and private debt outstanding.
Household debt is nearly 200% of wage and salary income.
Real median household net worth has declined by 30% since the late 1990s.
All as financial assets have climbed to ever increasing highs, inflating the wealth of those who rig our system, while the middle class crumbles.
How did this happen?
The Fed’s Fools Feed Wall Street’s Wolves
Wall Street is a debt-fueled casino, and their game is rigged against you.
But the hideous level of speculation rampant on Wall Street today would never have happened in a million years with an honest free market.
Stock market indexes are hanging from a skyhook only because the present mega-bubble was enabled by the TARP bailout of October 2008 and the Fed’s $3.5 trillion money printing spree.
There has been absolutely no after-tax barrier to capital investment in recent years thanks to the Fed and other central banks. They’ve made the cost of capital — both debt (ultra low yields) and equity (ultra-high PEs) — cheaper than at any time in modern history.
The Fed’s rate cut has been a pure gift to the Wall Street Wolves, and to the top 1% who own most of the stock.
Because no matter what the President, the GOP, or anyone else tries to tell you… the infinite free money train isn’t being used to reinvest in businesses, create jobs, or otherwise benefit of the American worker.
Instead, it’s being strategically used to continue inflating this financial asset bubble to new heights.
And now that the data is in for 2018 Q1, there’s no room for dispute.
Stock buybacks of $180 billion for the S&P 500 set an all-time record.And when you throw in record M&A and dividend payments (not shown) of another $400 billion, it is evident that the annualized rate of financial engineering just for the S&P 500 nearly hit the $2 trillion mark.
It goes without saying that distributions to Wall Street does not grow the economy in the near-term — regardless of the theoretical merits of high returns to shareholders.
That’s especially the case when such distributions are paid for with debt or represent the one-time impact of tax policy changes.
The so-called economic recovery we’ve experienced? It’s essentially smoke and mirrors.
All of that money has been sucked into up into the biggest con game of all…
Excessive financial engineering from Wall Street bankers and greedy corporate CEOs, all in an effort to pump and dump their stocks.
That’s because during Fed-driven bubble cycles, unsustainable imbalances, and speculative excess build-up throughout the financial system.
Accordingly, the longer the bubble cycle’s duration — with this current one being the second longest expansion on record — the greater the risk of a thundering collapse originating in the Wall Street casino.
Indeed, the Russell 2000’s (NYSE: RUT) recent leap over the 1700 mark… which took the PE of America’s small and mid-sized companies to an absurd 90 times earnings… was a clanking warning bell that the end is near.When these artificial financial bubbles eventually implode under their own weight… they send the C-Suites of corporate America into a frenzy of worker and asset dumping, which they are pleased to call “restructuring.”.
But in plain English, crashing stock option values in the C-Suites are what cause modern recessions.
Needless to say, the bigger the bubble, the greater the ensuing financial implosion and C-Suite driven shock to the main street economy.
And we have no doubt whatsoever that what has been called the current “Everything Bubble” is far more egregious than the prior three which brought the blue spaces in the chart to an abrupt end.And thanks to the Fed’s policy of Bubble Finance, the decades of rot were never purged during the last financial crisis.
So Wall Street’s debt-fueled casino is well and truly a ward of Washington politics and ultimately dependent upon its timely interventions and subventions for stability and survival.
The End of Wall Street?
A crash is coming. It’s only a matter of when.
Here’s the thing, however.
The real issue is not the exact month in which the next recession officially begins…
But how long the GDP and the stock market averages dwell along what will be an L-shaped drop off a cliff (and NOT a V-contoured, bottom like 2009-2010).
What is coming down the fiscal pike every month until then is a bone-jarring battle over $1.5 trillion-plus annual deficits, soaring interest expense, debt ceiling extensions/increases, and continuing resolution battles the likes of which Washington has not seen in modern times, if ever.
More importantly, when it does happen, there won’t be some kind of TARP 2.0 or Obama Stimulus redux.
Nor is the cavalry coming from the Eccles Building. To the contrary, the Fed has now started to shift away from its Bubble Finance money printing operation and are reversing course.
So the central banking branch of the state will positively and persistently implement another great monetary experiment — this one based on draining the bond pits of $600 billion of cash at an annualized rate beginning in October.
That fact alone should terrify the wolves on Wall Street.
After all, the Fed will be draining cash at an annual rate which is greater than the entire footings of its balance sheet in April 2002 — a position that had taken fully 88 years to accumulate.
As the Fed giveth to Wall Street, so it taketh away.
And when they do… there will be blood.
The ugly truth of the entire era of Bubble Finance will finally emerge. Namely, the casino has been selling hot air since the turn of the century.
And the truth of the matter will be impossible to hide once the bubble currently under-pinning Wall Street gets punctured by the anti-Trump hysteria now enveloping the Imperial City.
To that, I say good riddance.
P.S. Want to know how you can fight back against the Deep State and protect your retirement from danger?
Click here now to find out how you can be part of a growing group of concerned citizens who are ready to take action and defend our way of life.