Trade war or not New York bankers will have it their way

President Donald Trump is seen at his desk in the Oval Office. Sometimes he works hard, for the…bankers. (Official White House Photo by Shealah Craighead)

The US and China agreed to hold talks on 7-8 January in Beijing to settle their trade differences, which have already eaten into both economies and disturb the global financial universe. If they fail to agree this week, the impact will be worse. It seems things are so bad, that the US Federal Reserve Chairman Jerome Powell was forced to back down from his long term plans to further raise Fed’s interest rates.

According to Reuters, he said “the Fed would be flexible in deciding future interest rate hikes, balancing the steady flow of strong economic data against an array of risks, from slowing global growth to worries about trade, that have spooked investors”. Before discussing the Chino-American trade war, let’s dig a bit into the American monetary developments.

Powell changes course

Right from his nomination as Fed Chairman, Powell has been defending the need for more interest rates hikes because of the “steady flow of strong economic data”. This reality may lead to strong inflation pressures. Nevertheless, last Friday, he bowed before the screams of ‘investors’ and left it to be understood he will “be patient” with Fed’s monetary policy, signalling a hold of interest rates increases. Actually, he went as far as to say “We are always prepared to shift the stance of policy and to shift it significantly, if needed”. This means instead of increases the Fed may launch rate cuts.

Clearly, it was the mammoth New York banks, who forced Powell to think twice before making them pay a bit higher interest on around $4 trillion the Fed has pumped into the banking system (it should have been real loans if the banks paid any noticeable interest rate for that). Even worse, the banks now demand that the Fed even lowers its 2.25% rate. For years – from 2008 to 2016 – this rate had been flat zero, to ‘help’ the banks recuperate from the financial meltdown their insatiable greed for money had inflicted upon the real economy.

Again it’s the banks

Yes, the New York banks feed on other people’s money. Last Friday 4 January, just the possibility of lower or at least steady Fed interest rates sent the S&P and the Dow Jones – the Wall Street stock market main indexes – to the sky up by 3.43% and 3.29% respectively. The Fed’s money is American people’s money which the major US banks get for free or for a token interest rate. Then, they lend it at interest rates averaging of more than 10%, making huge profits without sweating or any proper risk taking. If they fail, the taxpayers will certainly bail them out.

This is exactly what happened in 2008 and will happen again soon. Free or cheap money in the hands of bankers still continues being ‘invested’ in all and every grey derivative or high risk markets. For example, Turkey pays the New York bankers 14% on dollar loans. However, the country may not be able to continue doing so in the future. Then, it will be the US taxpayers who will undertake the burden to save the imprudent bankers, acting as their insurer of last resort. No charge for that whatsoever.

Trump backs bankers

Of course, the banks are not alone in exploiting the real economy and the real people. The impossible ‘America First’ President, Donald Trump is spearheading the bankers fight against Jerome Powell’s efforts to get something back, from what the Fed has freely given them. The White House has repeatedly attacked Powell for continuing to apply the absolute necessary monetary measures which his predecessor Fed head Janet Yellen introduced in 2016.

Trump has repeatedly threatened to fire the Fed Chairman and now the White House war against him has started paying…dividends for bankers. So, last Friday Powell finally accepted to back down from his own policy choices and succumbed to the demands of bankers and Trump for cheaper money.

The Wall St. sharks

The political harlequin of Washington D.C., who promised the ‘left behind’ Americans to actively work for them, is now doing whatever he can to support the major US banks and the Wall Street sharks to continue feeding on the real American economy. At the same time, Trump’s unprecedented trade attacks, mainly against China, have started affecting the real US economy. This brings us to the meeting point of global trade grievances and the Fed’s interest rates.

For weeks, even months, the New York Stock Exchange has been plummeting, with the Wall Street magnates blaming global trade troubles. Last Friday, however, a Powell statement, announced preparedness for a significant shift in monetary policy. This means cheaper charges for the $4 trillion banks have got from the Fed. That’s why the NYSE partied. As noted above, S&P rose by 3.43% and the Dow by 3.29% celebrating the new era of cheaper money.

The trade wars

This is all the banking sharks care about; pocketing Fed’s money, that is, American people’s money, cheaply or even free of charge. They don’t care if Trump’s trade attacks against China have started eating into the US real economy. Theirs is the financial universe preying on the same real economy. Their ‘earnings’ stem not from labor or industry or risk taking of any kind, but rather from their sovereign grip and absolute control of whatever has to do with money. Actually, they create their own money, piles of it.

In conclusion, the NYSE and mammoth banks don’t care if a real trade war erupts with China or the European Union, as long as it doesn’t touch their ability to feed on other people’s money. Trump does his best in this direction, possibly not without important personal gains. Trade war or not, the New York bankers will have what they want.