What is the most likely cause of civil unrest today? Immigration. Gay marriage. Abortion. The results of Election Day. The mosque at Ground Zero. Nope.<\/p>\n
Try the Federal Reserve<\/strong>. Nov. 3 is when the Federal Reserve\u2019s next policy committee meeting ends, and if you thought this was just another boring money meeting you would be wrong. It could be the most important meeting in the Fed\u2019s history, maybe. The U.S. central bank is expected to announce its next move to boost the faltering economic recovery. To say there has been considerable debate and anxiety among Fed watchers about what the central bank should do would be an understatement. Chairman Ben Bernanke has indicated in recent speeches that the central bank plans to try to drive down already low interest rates by buying up long-term bonds. A number of people both inside the Fed and out believe this is the wrong move. But one website seems to indicate that Ben\u2019s plan might actually lead to armed conflict.\u00a0Last week, a post on the blog Zero Hedge said …\u00a0<\/strong>that the Fed\u2019s plan is not only moronic, but\u00a0\u201cpositions US society one step closer to civil war if not worse.\u201d<\/strong><\/p>\n
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The problem is that the Fed directly sets only short-term interest rates. And they are already about as close to zero as you can go. That\u2019s why Bernanke has been talking about something called \u201cquantitative easing.\u201d That\u2019s when the Fed basically creates money to buy the long-term bonds that it doesn\u2019t directly control and drives down those interest rates as well. That should further reduce the cost of borrowing for large companies and homeowners. Some people are calling this \u201cQE2\u201d because the Fed made a similar move during the height of the financial crisis when it bought mortgage bonds. (See photos of the Tea Party movement)<\/p>\n
Not everyone agrees this is a good move. In fact, a number of presidents of regional Fed banks, not all of which get to vote at Fed policy meetings, have recently come out against Bernanke\u2019s plan. Some say it sets bad policy. Others think it will stoke inflation, which might be the point. Few, though, have warned of armed conflict.\u00a0Here\u2019s how Zero Hedge justifies its prediction of why the Fed\u2019s Nov. 3 meeting will lead to violence:<\/strong><\/p>\n
In a very real sense, Bernanke is throwing Granny and Grandpa down the stairs \u2013 on purpose. He is literally threatening those at the lower end of the economic strata, along with all who are retired, with starvation and death, and in a just nation where the rule of law controlled instead of being abused by the kleptocrats he would be facing charges of Seditious Conspiracy, as his policies will inevitably lead to the destruction of our republic.<\/em><\/p><\/blockquote>\n
O.K. The idea that Bernanke might kill large swaths of low-income neighborhoods or Florida by his plan to further lower interest rates is a little ridiculous. But there is a point in Zero Hedge\u2019s crazy. Lower rates do tend to favor borrowers over savers. And the largest borrowers in the country are banks, speculators and large corporations. The largest spenders in the U.S., though, tend to be individuals. Consumer spending makes up 70% of the economy. And the vast majority of consumers are on the low end of the income scale. So I think it is a valid question to ask whether the Fed\u2019s desire to drive down interest rates at all costs is working. Companies are already borrowing at low rates. They are just not spending. (Read a special report on the financial crisis blame game)<\/p>\n
That being said, civil war, probably not. \u201cIt is a gross exaggeration,\u201d says Allan Meltzer, who is a top Fed historian at Carnegie Mellon.\u00a0<\/strong>\u201cI cannot recall ever learning about riots or civil war even when the Fed made other mistakes.\u201d<\/p><\/blockquote>\n
All this happened more than a decade ago – since then we have seen not only QE2, but “Twist”, QE3, “NOT QE”, and eventually\u00a0QE<\/em>ternity last March which mutated into outright and unlimited helicopter money to pay for universal basic income – and while at the time it merely added to our “reputation” of a tinfoil conspiracy blog, it appears we were (sadly) correct again based not only on the increasing tears within the US social fabric which culminated in unprecedented riots and looting last summer and continued social upheavals in recent months, but also in terms of what one of the biggest investing minds of this generation just tweeted. We are referring to Bridgewater founder and billionaire Ray Dalio, who moments ago tweeted that we are “on the brink of a terrible civil war”.<\/strong><\/p>\n
Here is what Dalio\u00a0just said<\/a>:<\/p>\n
<\/div>\nBack in February, I said I wanted a president who could \u201cbring together our country to face our challenges in a more united and less divisive way.\u201d<\/em><\/p>\n
I wanted someone who would unite people \u2013 i.e. who does not view themselves as the leader of the winning side imposing policies the other side would find intolerable.<\/em><\/p>\n
I believe we are on the brink of a terrible civil war\u00a0<\/strong>(as I described in The Changing World Order series),\u00a0where we are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity that addresses the big wealth, values, and opportunity gaps we\u2019re now seeing<\/strong>. For that reason I was thrilled to hear what President Biden said at his inauguration. It is consistent with the direction history has shown the country needs to move in.<\/em><\/p>\n
Now the question is whether the president and both parties will bring that about. Good words and spirit aren\u2019t enough. People will have to agree on both how to grow the pie and how to divide it well. That will require revolutionary change.<\/em><\/p>\n
Doing it peacefully requires both bipartisanship and skill. It won\u2019t be easy. Our country is still in a terrible financial state and terribly divided.<\/em><\/p><\/blockquote>\n
While Dalio correctly points out the extremely precarious spot where splintered US society stands right now, it is again disappointing that instead of admitting the true poison eating away at the heart of US society, Dalio once again refers to the symptom – the presidency – and not the underlying diseases that brought it on. We are confident that it has to do with the fact that the well-being of Dalio’s own fortune is heavily reliant on not kicking the hornets’ nest of catastrophic monetary policy, but merely diverting attention to whatever is the media taking point bulletin\u00a0du jour<\/em>, in this case the ongoing\u00a0Trump vs Biden\u00a0<\/em>narrative clash.<\/p>\n
We can only hope that one day Dalio will have the guts to tell the truth about why we are indeed “on the brink of a terrible civil war”<\/em>\u00a0and expose the real criminals behind the deadly divisions tearing apart US society.<\/p>\n
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