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The Fed: Politics and the economy, from Peter Myers

(1) Fed's attempt to oust Trump may put Sanders, Warren or Gabbard in by mistake(2) Fed & IMF may switch from $ to SDR as World Currency - William Engdahl(3) Fed Banker says Fed should help defeat Trump in 2020 by keeping interest rates high(4) Most U.S. Companies Plan to Stay in China and Ride Out Trade Unrest(1) Fed's attempt to oust Trump may put Sanders, Warren or Gabbard in by mistake- Peter Myers, September 8, 2019Several months ago, F. William Engdahl postulated that the Fed might be holding interest rates high as a strategy to cause recession, which would be blamed on Trump, making his re-election unlikely.He expressed such thoughts in his article  Did the Fed Already Decide the 2020 US Election? 2 is his latest update on that topic.I think he's right, that the Fed is trying to get rid of Trump, by inducing a recession that he will be blamed for.But the consequences might be different from what they envisage.It could be that voters, sick of the whole rotten pack of cards, will turn to Sanders, Elizabeth Warren aulnd si Gabbard, in the belief that only such candidates will bring real change.Sanders has much in common with Trump. They are both outsiders, somewhat isolationist (although Trump submitted to the Deep State when he appointed Bolton).At this stage, the above three 'Left' candidates look unlikely to win.But the recession has yet to bite. When it does, voters might be more appreciative of  their socialist (but non-Communist) ideas. They are Old Left rather than New Left. They look to the North European kind of Socialism.Wall Street will oppose them as much as they oppose Trump.If the Democratic Establishment (DNC) cheats these candidates as they did Sanders in 2016, I hope that they consider running as Independents.(2) Fed & IMF may switch from $ to SDR as World Currency - William Engdahl the Fed Preparing to Topple US Dollar?By F. William Engdahl1 September 2019Unusual remarks and actions by the outgoing head of the Bank of England and other central banking insiders strongly suggest that there is a very ugly scenario in the works to end the role of the US dollar as world reserve currency. In the process, this would involve that the Fed deliberately triggers a dramatic economic depression. If this scenario is actually deployed in coming months, Donald Trump will go down in history books as the second Hebert Hoover, and the world economy will be pushed into the worst collapse since the 1930s. Here are some elements worth considering.Bank of England speechThe about-to-retire head of the very special Bank of England, Mark Carney, delivered a remarkable speech at the recent annual meeting of central bankers and finance elites at Jackson Hole Wyoming on August 23. The 23-page address to fellow central bankers and financial insiders is clearly a major signal of where the Powers That Be who run world central banks plan to take the world.Carney addresses obvious flaws with the post-1944 dollar reserve system, noting that, "…a destabilising asymmetry at the heart of the IMFS (International Monetary and Financial System) is growing. While the world economy is being reordered, the US dollar remains as important as when Bretton Woods collapsed." He states bluntly, "…In the longer term, we need to change the game…Risks are building, and they are structural." What he then goes on to outline is a remarkably detailed blueprint for global central bank transformation of the dollar order, a revolutionary shift.Carney discusses the fact that China as the world leading trading nation is the obvious candidate to replace the dollar as leading reserve, however, he notes, "…for the Renminbi to become a truly global currency, much more is required. Moreover, history teaches that the transition to a new global reserve currency may not proceed smoothly." He indicates that means it often needs wars or depressions, as he cites the role of World War I forcing out sterling in favor of the US dollar. What Carney finds more immediate is a new IMF-based monetary system to replace the dominant role of the dollar. Carney declares, "While the rise of the Renminbi may over time provide a second best solution to the current problems with the IMFS, first best would be to build a multipolar system. The main advantage of a multipolar IMFS is diversification… " He adds, "… When change comes, it shouldn’t be to swap one currency hegemon for another. Any unipolar system is unsuited to a multi-polar world… In other words he says, "Sorry, Beijing, you must wait."The Bank of England Governor proposes in effect that the IMF, with its multi-currency Special Drawing Rights (SDR), a basket of five currencies—dollar, Pound, Yen, Euro and now Renminbi—should play the central role creating a new monetary system: "The IMF should play a central role in informing both domestic and cross border policies. … Pooling resources at the IMF, and thereby distributing the costs across all 189 member countries…" For that to work he proposes raising the IMF SDR funds triple to $3 trillions as the core of a new monetary system.Then Carney proposes that the IMF oversee creation of a new payments infrastructure based on an international "stablecoin." Referring to the private Libra, he clearly states a "new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies." Note that Carney, a former Goldman Sachs banker, is mentioned as a leading candidate to replace Christine Lagarde as IMF head. Is his speech open admission of what is being planned by the world’s leading central bankers as the next step to a world currency and global economic control? Let’s look further.Lagarde to ECBThe Carney speech, when deciphered from its central bank language, gives us for the first time a clear roadmap where the powers that control world central banking would like to take us. The world reserve role of the US dollar must end; it must be replaced by some form of IMF SDRs as basis for a multi-currency reserve. That in turn would ultimately be based on digital money, so-called block chain currencies. Such currencies, make no mistake, would be completely controlled by central bank authorities and the IMF. That would require their often-proposed elimination of all cash in favor of digital money where every cent we spend can be monitored by the state. This cashless society would also set the stage for the next great financial crisis and the confiscation by governments of ordinary citizens’ bank deposits under new "bank bail-in" laws now on the books since 2014 in every major industrial country including the EU and USA.The IMF is fully behind the turn to global blockchain digital currencies and use of SDR to replace the dominant US dollar. In a little-noticed speech in November 14, 2018, IMF chief Lagarde strongly indicated that the IMF was behind central bank digital currencies as well as cashless societies. She noted very carefully, "I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy." She added, "A new wind is blowing, that of digitalization…What role will remain for cash in this digital world? … demand for cash is decreasing—as shown in recent IMF work. And in ten, twenty, thirty years, who will still be exchanging pieces of paper?"Dudley RemarksThe introduction of this central bankers’ new digital currency world will require, as Carney suggests, dramatic upheavals of the status quo, upheavals that would lead to the end of the dominant role of the US dollar since the 1944 Bretton Woods agreement. As that dollar reserve currency role is a pillar of American power in the world, for that to happen would require nothing short of catastrophe. Is this in fact what the Federal Reserve is quietly planning with its money policies?A remarkable hint of what might be in the works came in an OpEd by the person who until 2018 was the very important President of the New York Federal Reserve Bank, Bill Dudley, who like Mark Carney is a senior Goldman Sachs alumnus. Dudley is no minor actor in the central bankers’ world. Until last year he also was a member of the Bank for International Settlements Board of Directors and chaired the BIS Committee on Payment Settlement Systems and the Committee on the Global Financial System.Dudley, pointing to the Trump trade war policies and economic dangers of same, then issues the following rare undiplomatic declaration: "Trump’s re-election arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives. If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020." While it shocked many, Dudley is merely making public what the Fed has done since its creation in 1913 — influence the course of world and US politics stealthily behind the cover of "neutral" monetary policies. Dudley suggests not "Russian interference" but rather Fed interference.The Fed could easily tip the US into crisis. The debt levels of the US economy are at record high levels for private households, Federal government, and US corporate debt. Most US corporations have used growing debt, well over $9 trillion, to make stock buybacks rather than invest in new plant and equipment, fueling an unprecedented bubble in the S&P stocks. The rising stocks are not a sign of economic health but of a dangerous speculative bubble vulnerable to collapse.Were the Fed now to resume rate rises and continue its less-publicized Quantitative Tightening into 2020, a domino-style series of debt defaults, corporate bankruptcies, home mortgage foreclosures, default on car loans and student loans could quickly make a second Trump Presidency in 2020 more than doubtful. However that would be no grounds for the rest of the world opposed to Trump policies to cheer. It would also trigger collapse in major emerging market countries who have borrowed hundreds of billions denominated in US dollars, including Chinese state companies, Turkey, Argentina, Brazil to name a few. EU banks from Italy to Germany to France would fail.If this Dudley scenario comes to pass in 2020 or not, only the key central bank actors know for sure. It is clear that, after almost eleven years since the 2008 global financial meltdown, the unprecedented central bank zero interest rate policies in the EU and until recently the US, have fueled creation of what some call an "everything bubble", not only in stocks, in corporate and public bonds, in home prices. Is a new Fed intervention to raise rates and tighten credit the event– the deliberate central bank rupturing of this inflated bubble using the excuse of the Trump danger to the world economy– that Carney has in mind when he says, "transition to a new global reserve currency may not proceed smoothly,"? Let us hope not. The coming months will tell.F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine "New Eastern Outlook"(3) Fed Banker says Fed should help defeat Trump in 2020 by keeping interest rates high should help defeat Trump in 2020A former top US central banker has sparked a firestorm with an opinion piece calling on the Federal Reserve to do something truly outrageous.AFP AUGUST 28, 2019 8:38AMA former top US central banker leapt into the political fray on Tuesday, calling on the Federal Reserve to oppose President Donald Trump’s re-election effort next year.Bill Dudley, the influential former president of the New York Federal Reserve Bank, also said the Fed should not "enable" Trump’s escalating trade war with China by lowering interest rates.The stunning arguments in a Bloomberg opinion column flew in the face of efforts of current Fed officials to remain strictly neutral, above the political fray, despite Trump’s intense year-long campaign to demand easier monetary policy.But Dudley said the outcome of the 2020 presidential elections was arguably "within the Fed’s purview" because a second Trump term represented a threat to the global economy as well as the Fed’s political independence and policy mandates."If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020," he wrote.Trump already blames the Fed, rather than trade policy, for the slowing economy and has demanded drastic cuts in interest rates in his relentless, nearly daily attacks.Last week he called Fed Chairman Jerome Powell an "enemy" and on Tuesday tweeted that central bankers loved "watching our manufacturers struggle" to export to markets with easier monetary policy.Powell, when asked, has consistently brushed off Trump’s near-daily invective, saying Fed officials do not take politics into account when deciding on policy.Earlier this month, the Fed cut interest rates for the first time in more than a decade even though unemployment remains at historic lows, amid growing concerns about the global economy.Investors overwhelmingly expect the Fed to deliver at least a 25-basis-point rate cut next month as the economy slows and the US-China trade war drags into its second year.But Dudley, who also served as the vice chairman of the Fed’s rate-setting Federal Open Market Committee, said in his op-ed that providing more stimulus could encourage Trump to escalate a "disastrous" trade war with China, which deteriorated sharply last week.NOT POLITICISING"The central bank’s efforts to cushion the blow might not be merely ineffectual. They might actually make things worse," he wrote.Instead the Fed should clearly state that it will not cut rates to send a signal that Trump will own the risks created by his trade wars — "including the risk of losing the next election," Dudley said.Dudley retired from his post as New York Fed president last year and is currently a senior research scholar at Princeton University.Richard Fisher, former president of the Dallas Federal Reserve Bank, said Tuesday the Fed’s moves were decided purely on the merits and were not reactions to Trump’s actions."I am convinced that they are not politicising," he told CNBC, adding that he felt Dudley had gone "a little too far" in his opinion piece.On the other hand, Fisher warned that policymakers who bent to the will of the White House risked the scornful judgment of history.He cited the example of former Fed Chairman Arthur Burns who, was bullied into easing policy by President Richard Nixon, helping ignite runaway inflation.Burns "prostituted himself" to Nixon and became "the least respected of all former Fed chairs," Fisher said.(4) Most U.S. Companies Plan to Stay in China and Ride Out Trade Unrest Jenny LeonardAugust 30, 2019, 1:31 AM GMT+10When President Donald Trump ordered American companies last week to break off ties with China, he gave a directive that conflicts with the plans of a vast majority of large U.S. firms doing business there.That’s according to a new survey of U.S.-China Business Council members. Eighty-seven percent of respondents said they neither have moved nor plan to shift operations out of China, compared with 90% in a 2018 survey. Only 3% said their China operations were unprofitable, unchanged from a year ago."The majority of American companies surveyed remain committed to the China market and few are currently divesting existing operations," according to the survey results released Thursday in Washington.The survey, reaching about 100 members of the council, was conducted over three weeks in June. The relationship between the U.S. and Chinese governments has soured since, with on-again, off-again negotiations that have created uncertainty for investment plans.The survey was taken before Trump’s Aug. 23 tweet, which said: "Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."....better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing.. — Donald J. Trump (@realDonaldTrump) August 23, 2019Craig Allen, president of the council, said he didn’t interpret Trump’s tweet as pushing American companies that serve the Chinese market domestically to leave the country."We do not believe that he wishes to encourage other American companies that have successful operations in China to leave," Allen said. "Our members are in China for the long term, none of them are anticipating orders to leave."The council’s survey showed that the overwhelming majority of its members invest in China to access the domestic market and "less than a quarter of companies invest in China to export regionally or to the United States."Read more: Trade War or Not, U.S. Companies Follow the Consumer to ChinaThe survey alluded to a cautious review of companies’ supply chains in China and paints a grim picture of the effects of a trade war that’s now in its second year. Eighty-three percent of respondents said they didn’t curtail or stop planned investments over the past year, down from 92% a year ago."Nearly half of respondents report lost sales and ceding market share to foreign competitors," the survey stated. "The primary contributor to lost sales is the implementation of both U.S. and Chinese retaliatory tariffs, as evidenced by lost price competitiveness, shifts in supply chains, and uncertainty of continued supply."Allen said loss of business in the Chinese market from the trade war could have long-term, negative impacts for American companies."Losing market share is easy," he said. "Gaining it back is very, very difficult."