Here’s why the FED wants to avoid a recession so badly — And why it will Fail.
One of President Trumps main points that he made during his bid for President prior to the 2016 elections was for a flourishing economy. He delivered on that, and we reached new highs on major stocks and indexes.
The Corona-Virus came along, and suddenly investors felt scared, especially after the entire world was slowly shutting down. Assets dropped at records speeds, and it was a major headline for weeks.
In Mid-March, Jerome Powell (FED Chairman) announced they would be cutting interest rates to a record low of almost 0%, and printing more money than ever recorded in history. This sent shockwaves across the markets, and they quickly begun to reverse.
A key thing that economists look at is the politicians involved in managing an economic downfall. After the 2008 recession, Democrats agreed to bail out big banks in order to avoid insolvency, and rebound the economy. This decision resulted in a 10+ year long bull run, which also helped Obama’s re-election in 2012.
With Donald Trump as president, we saw the criticism against him reach new heights in 2020, as many people (especially the media) said he was responsible for the economic downfall. While I disagree with that, it surely was on Trump’s (and the republican parties) agenda to hide this issue under the rug as it could cost him the re-election in November 2020.
Jerome Powell is a prominent Republican, and has arguably one of the most important roles in the government. Let me bring to you the term, ‘political business cycle’. This is used mainly to describe the stimulation of the economy just prior to an election in order to improve prospects of the incumbent government getting reelected.
It’s clear that the endless money printing would eventually have devastating effects on the economy, and especially the U.S dollar in terms of hyper inflation, but I believe Powell used his power as a temporary way to rebound the economy for until the election passes.
Republicans know very well that they will NOT win with a failing economy.
China Trade Deal
Another way that they have tried to have economic growth in 2020 was through the Chinese trade deal. Notice how the plan was phased out into numerous phases, which led into late 2020. The deals got delayed, but the idea was for them to decrease America’s deficit before election season.
Re-Election Chances are Slim
My opinion on the 2020 Election is that Donald Trump will not win.
I tend to avoid politics on my Twitter because It always results in arguments, without anything meaningful, but what I don’t avoid is facts. Joe Biden is ahead of Trump by more than any other candidate in the last few decades has been ahead of their opponent. Not just that, but theres a strong urge for millions of new voices who didn’t vote in the previous election to vote now, as well as the potential (and high probability) of a rigged election involving mail-in ballots.
Trump failed to capture the popular vote in 2016, and his support has gone down since then. His victory was extremely lucky, and was clenched by the Electoral College. While I dislike Joe Biden a lot, and think he would be a terrible president, I will refuse to let bias get in the way of reality.
The Corona Virus pandemic, and mass riots across the state have further sunk republicans support from Americans.
Trump will not be the president of the United States next year. That sentence will piss off a lot of people, and I’m not saying it in a way to say I dislike Trump — I liked many of his policies! It’s just to make my opinion clear, and what I think will happen. Let’s wait until November 2020, so I can be proved right as well. Let’s hope I’m wrong on that.
The reason this topic is important is because Trump and Biden differ immensely in terms of the economy. We must effectively price in the scenario that a Democrat is the next president of the United States, and the impacts on the economy.
Through a poll of 2500 people on Twitter, over half of them are bearish on if Biden won the election. Could he handle one of the biggest economic downturns in modern history? — Even democrats would say no.
The Economy is being eroded from the FED’s efforts.
Since February 2020, The U.S has printed trillions of dollars, cut interest rates, given out millions of stimulus checks while unemployment numbers rose rapidly, and chaos spreads.
We are now in a worse spot than 4 months ago because of the FED’s careless acts of attempting to manipulate the markets. As stated in one of my tweets, their main goal was to instil confidence in investors that they have everything under control. Once confidence was developed, they believed it would allow for economic growth for the rest of the year.
That failed miserably, and now the United States debt has surpassed records. Gaining over 2 trillions dollars in just the last 2 months.
The stock market is in a big recession, unlike anything seen before. The United States, and other economies are unsustainable. They’ve been feeding the rich elites for too long, and failing to develop something sustainable.
Once the PPP loans run out, and Businesses fire off millions of people, Unemployment will skyrocket to above 40%.
Once the second stage of Corona Virus comes, it’s expected that it will kill more than 5 million Americans, which is more than the Spanish Flu.
Money is the root of all evil
Instead of dwelling on poor political decisions that will likely launch the world into a depression, It’s important to not fall for their traps in the future. Moments like this are where money transfers from the poor to the rich at greater speeds than anything before.
I hope this article was educational. Regardless if you agreed on my opinion or not, I believe I provided strong reasoning for all points I made. Time will prove me right, so save the criticism for next year.
Happy Trading Everyone!