Powell is Bankrupting the Rich Men North of Richmond | QPOL #58
They say monetary policy happens on a lag of around 6-12 months. That lag seems to be hurtling at the global economy like an asteroid as Powell’s policy of Higher For Longer ripples through each sector of the markets for better or for worse...
Welcome to the White Collar Recession
Powell’s policy is forcing companies to trim the fat (and rightfully so). He’s ridding the over-financialization of the country, or at least consolidating it and exchanging hands. This Fast Company article demonstrates precisely the effects of Powell’s Higher For Longer policy, noting that “more VC- or private equity-backed startups will fall into bankruptcy this year than at any point since 2010.”
This is the same Private Equity class of oligarchs that relied on the Bernanke Doctrine (ZIRP) to create domestic eurodollars outside the Fed’s control. Now as debt becomes too expensive, they are losing their monopoly over the markets in real time thanks to the rate hikes. Only under ZIRP could they leverage themselves to the hilt to fund poor excuses of tech companies in Silicon Valley that wouldn’t have existed otherwise (SVB et.al). Now thanks to rate hikes normalizing prices, the zombie companies are being put back into their graves for good. Only the strong and profitable companies that provide products and services the market truly demands will survive. For the rest, well, this is where the White Collar recession comes in.
The rate hikes are effecting major financial players like Charles Schwab. After acquiring a bunch of TD Ameritrade’s customers from the 2019 merger, Schwab continues to experience “lower net flows… as retail clients take their business elsewhere.” In such a high interest rate environment, it would make sense that as clients might rather pull funds out and invest in a CD paying 4.5% rather than trust a third party to navigate the mirky and uncertain waters on the market right now. To add insult to injury, with info floating around on Twitter that Schwab may be the next Lehman (true or not), news drives the algos which drive the markets.
From my own personal experience and anecdotes, financial companies and businesses in are cutting costs and forcing people out. They’re trimming the fat of middle man employees and giving lower paid positions more responsibility to make up for the higher paying positions they fired people from.
Europe’s New Frontier
In case you missed it, Lagarde is screwed. The ECB can’t save Europe. Lagarde recently failed to defend both the euro and credit spreads (10 yr) and chose to buy the 2ry instead…
This is mainly due to capital flight out of Europe and the constant buying of treasuries and/or dollars. Lagarde’s constant selling of USTs is dragging rates higher and overwhelming her capacity to buy them and eurobonds. Higher treasury rates are attractive, which makes people sell Eurodebt for US debt instead. She has to make up the difference somewhere.
Not to mention, inflation is running hot everywhere, but mostly in Europe. They are net importers of energy and have no collateral. These are the reasons why the ECB can go bankrupt…
THAT’s why Soros (and capital in general) is leaving Europe. You can now just start to look at the EU as a frontier nation. Or maybe even a penny stock. The headlines of the US’s downgraded credit rating may be be warranted, but it’s a smear campaign on the US if anything in order to freeze capital and prevent any more of it leaving Europe.
It is the destruction of offshore dollars that isn’t giving Lagarde the ammo to defend the euro and credit spreads. Not to mention, the United States has control of the pricing of offshore dollars since switching their debt indexing rate from LIBOR (a globalist rate dictated by the cabal at the City of London) to SOFR (a securitized rate based on actual market activity by US financial institutions.
This is all thanks to Powell’s unprecedented monetary policy. Monetary policy in general happens on a lag, but the globalists at the EU are about to (if not cry), whimper Uncle. The global-commie European oligarchs are running out of money, according to DImon, the Fed shows no signs of stopping rate hikes in the near future.
These are the effects of Powell’s “higher for longer” monetary policy. This is the United States taking back their monetary independence. Yet amidst all this breaking down of globalist financial control, the public can’t help but be gaslit by their own pessimism. The latest Oliver Anthony phenomenon either leaves people feeling inspired that somebody is publicly singing their sorrows, or they’re jaded by the doom scrolling of how bad the world is and default to the idea that Anthony is just another astroturf project just like the hippy/drug revolution fueled by MK Ultra. To those doom and gloomers, stop it. Take the win. Ask yourself if there’s a reason why there’s so much pushback against this guy. He’s singing the quiet part out loud and exposing the deep state for what they are. Even if he is astroturfed, he’s getting the American people mad at the right people for the right reasons. That is the deep state’s kryptonite: people thinking for themselves and ready to make a change collectively, be it at the voting booth or their local communities. And just as people dismiss Anthony, it’s in the same vein of how people in the alternative finance (or normie finance) space dismiss what Powell’s monetary policy is actually achieving. Like it or not, Powell is Bankrupting the Rich Men North of Richmond. Stick that in your mic and sing it.
~ Phil Gibson
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