After GOP tax cuts, Dems at Fed poised to pop stock bubble and tank Trump

I warned about this back in June, after hearing warnings from Nassim Taleb and Peter Schiff, while adding insights from my analysis of the Dems vs. GOP battle being between the Wall Street party and the Pentagon party.

The signs that the stock market is a bubble are only clearer six months later -- a record number of record numbers, as we close out the year. Number of days with record-high closings, number of months of stock market growth (all 12), absolute level of the peaks (now 25,000), probably a record in the percent growth in a single year (about 25%), etc.

That is the subjective speculation about what the value is of these companies, largely driven by internet and tech companies. The objective reality is that so many still don't earn anything, and the valuations compared to their sales is at a record high (outta-whack).

There has been no observable revolution in our economy -- we would see it, and feel it, like the Industrial Revolution planting factories all over the landscape, and newfound wealth pouring into our households as we left behind poor-paying agriculture. The holdovers from the real economy are being shuttered and swept aside also at a record pace, especially retail.

But trade deficits are growing at a rate and to a level they haven't seen since before the Great Recession -- another sign that the real economy, like manufacturing, is being even more vigorously shipped out of our country and into China, Mexico, Vietnam, etc., while we are left with servant jobs at Starbucks and imaginary wealth from tech start-ups (for the few who even land a job in that sector).

Debt, even compared to GDP, is still rising -- and may go back to skyrocketing after the $1 trillion tax cut, War on Terror 2.0 against Iran, etc.

All of this phony activity is being fueled by cheap money, driven by low interest rates that make borrowing easy, particularly for large entities.

At some point, the Federal Reserve, which sets these interest rates, has to deliver a day of reckoning -- but not when their own party is in the White House! That's the big piece of the puzzle that observers like Schiff missed during the Great Recession: the finance sector controls the Democrat party, so like hell they're going to pop a bubble when a Democrat is President.

But now that their rival party is in power -- indeed, in control of the entire government -- the finance sector can deliver the day of reckoning, when it can pin the blame on the other side of the great big struggle between elite factions.

Here is a graph showing interest rates, along with recessions in shaded columns. Notice how a spike in interest rates precedes a recession:



There is one major exception, when they raised rates in 1994 without triggering a recession. That's because the growth in debt (to GDP) had plateaued and even declined starting in 1993:



A spike in interest rates is the spark, and soaring debt is the gas. Since the major economic players were not projecting soaring debt during the mid-1990s, the spike in interest rates did not set off a cascade of bankruptcies or threats to bring down the whole economy unless they were bailed out.

And notice who was President then -- a Democrat! Generally, debt has been growing since around 1980, and every time the Fed has raised interest rates and then triggered a recession, it has been under Republican Presidents. They held rates comically low, around 0, for all 8 years of Obama. But once Trump got elected, they raised it for the first time in a long while, and have raised it three more times this year. They're clearly on track to jack them up even more next year.

What will be their rationale for raising interest rates to tighten the ease of borrowing money, and of paying back the money you already owe? That the economy seems to be doing better, so there's no need to flood it with so much cheap money anymore.

Trump, the GOP Congress, the RNC messaging department, and retarded conservative pundits all over the media keep touting how well the GDP growth has been (bubble, only benefitting top 1%), how astronomically the stock market has risen, how low unemployment has fallen (stopped looking for work, since labor participation is also falling), and now how turbo-charged it's going to get after passing massive tax cuts supposedly for corporations and wealthy people to do more hiring, pay higher wages, etc.

Naturally, these tax cuts will go right back into the pockets of the wealthy, as they always have. But the promises from the GOP have been consistently about how much better the economy and job creation is going to be because of the cuts.

"OK then," the Fed will respond. "It sounds like it's the perfect time to raise interest rates!"

And then blammo, the massive debt floating around -- made even worse by the $1 trillion tax cut -- is going to cost 10 times as much to pay back, and everyone's going to declare bankruptcy unless they can get bailed out (too big to fail is even worse after eight years of constant bail-outs).

The Republicans are too dumb to try to blame the Fed for raising interest rates, because they are too weak to attack the main power faction of their rival party, the finance sector. A party in decline does not attack the strongest part of its rival coalition, only the weakest part like labor unions. They probably would not even name the enemy by pointing out how the finance sector controls the Democrats in the same way that the military controls the GOP.

And even if they did try to explain how rising interest rates from the Democrats at the Fed have blown up the stock market, they would have to concede having lied about the state of the economy before the blow-up -- they gloated over and over about how awesome it had become under full GOP rule, and how even awesomer it was going to be with these gigantic tax cuts.

The Democrats will appear to have no blood on their hands, with Republicans taking all of the blame. The GOP will suffer in the mid-term elections if the Fed pulls the trigger with enough lead time for round-the-clock media coverage of the blown-up economy to seep into voters' brains by November.

The only time this didn't kill the Republicans' electoral prospects was during the Dot-com Bust, but that was only because Americans were rallying around the pro-military party after September 11th. Absent another 9/11 before the 2018 mid-terms, the GOP will have nothing to fall back on if the Fed has pulled the trigger by then.

Trump himself, who began as a de facto third party candidate and President, has by 2018 chosen to align himself 100% with the GOP's corporate agenda and the tax cuts and stock market growth specifically. It may be too late to shove McConnell and Ryan away and back-pedal on all those comments about how awesome the stock market bubble is.

Trump promised to become "the greatest jobs-producing President that God ever created," but by clinging to the GOP agenda and refusing to decry the stock market bubble, he could become remembered as the President who oversaw the mother of all economic blow-ups.

He did not help himself by bending over backward for the finance sector by appointing a Yellen clone to chair the Fed. He was pleading with them not to raise interest rates, in exchange for his appointing a chairman of their choice. But he's going to find out what brutal vicious killers the leading faction of the Democrat coalition is. They're going to raise rates and pop the bubble, regardless of the favor he did them by appointing a Yellen clone.

If the GOP factions like the military are willing to totally subvert and sabotage the positions he campaigned on, why would the Democrat factions be any less willing to stab him in the back?

"You knew damn well I was a snake before you took me in!"

If someone can sneak some advice around the Iron Curtain that General Kelly from the Pentagon junta has erected around the President -- during Christmas parole? -- it would be for Trump to distance himself as far as possible from these phony economic indicators.

Reiterate his famous phrase, "Folks, I inherited a big fat ugly mess," and return to attacking GOP saboteurs and Democrat opportunists alike. The GOP passed a massive tax cut that they knew would just be pocketed by corporate stockholders, and the Democrats kept interest rates near 0 under Obama for partisan reasons, and are only going to raise them now in order to destroy their rival party, and Trump personally.

Call out the widening trade deficits as a sign that the GOP is not bringing him his tariffs in order to return manufacturing, and that the real economy is only getting worse. "I never should have trusted the puppets of the Chamber of Commerce, folks, and I'm going to make it up by steering the boat in an entirely new direction."

And if somehow The Powers That Be get him -- assassination, impeachment, whatever -- at least he will have gone down fighting against them and clearing his reputation. If things continue in the current direction, he's going to be remembered as someone who surrendered to the elites' agenda and got blamed for their colossal fuck-ups in the economy.