Why Ice-9 may not happen soon, and why the Fed could continue to engineer a stable/bouyant stock market -
The Fed's plan to aggressively raise interest rates indicates that they want the flexibility to deal with a future financial crisis without having to resort to Ice-9. The elites want to eventually transition the world to the SDRs, and a crisis involving Ice-9 will be required to make this happen. But they want to have control over when this crisis occurs, and not be forced into it due to some otherwise manageable financial crisis snowballing out of control, a crisis which could have been easily contained by the Fed simply dropping rates and providing some liquidity.
Rickards says the Fed has desperately wanted to 'normalize' interest rates for years, but were stymied by weakness in the financial markets and economy. Prior to normalizing interest rates they first had to reduce and end QE, a process that took years and had to be put on hold numerous times due to the stock market freaking out ('taper tantrum'), and then other events like the Chinese yuan devaluation of mid-2015 set the markets into turmoil and delayed the Fed's interest rate 'lift off'.
Their current plan is to raise rates by 3% over the next 3 years. Rickards says the main motivation for this is so they'll have the ability to lower rates again when a future financial crisis comes along. The Fed's main tools to deal with crises are lowering interest rates, injecting liquidity, and doing bailouts. But with interest rates near zero and the Fed's tapped out balance sheet ($4.5 trillion), there's precious little 'ammo' in the Fed's toolkit.
If the Fedsters wanted to go straight into the Ice-9 scenario, why bother with the long laborious process of normalizing interest rates? So this indicates they aren't ready for Ice-9 and want to have the option
of using their traditional approach for containing financial crises. Ie, they want to be able to pick the time and place for the big crisis which brings in the SDRs (and Ice-9). If interest rates are normalized, the Fed at least won't be forced into Ice-9 due to lack of options, and they can prevent an otherwise manageable financial crisis from snowballing out of control.
What this means for the stock market and investors -
(continued)
