Fed Goes All-In, Exposes US Underbelly

The Federal Reserve's unexpected emergency rate cut last week, which it staked its entire credibility on, may become a catalyst for repricing the U.S. financial markets and U.S. Treasury bond prices.

The Fed took "emergency measures" (a rate cut of more than 25 basis points) usually only adopted during periods of economic depression and bankruptcy or during crises.

The last time this happened was at the beginning of the COVID-19 pandemic.

Before that, since the 2008 financial crisis, this situation had not been seen... People expected the Fed to cut rates, but the magnitude of the rate cut shocked many economists and Wall Street banks.

This fact should sound a deep alarm for everyone.

Is there something hidden behind the Fed's move, something that is not being disclosed?

Of course, the Fed insists that the 50 basis point rate cut is unrelated to the U.S. election, but don't let the Fed fool you.

They know such a large rate cut will cause the U.S. stock market to soar.

In fact, they chose the best time to pull the trigger.

The "excitement" brought by this significant rate cut should last at least one or two months, and currently, there are less than two months left until November 5th.

Should we believe this is just a "coincidence"?

Obviously, this is a fig leaf for the United States.

Although, Fed Chairman Powell said at the press conference after the September interest rate meeting: "Currently, I do not see any signs that the likelihood of economic decline has increased - economic growth remains robust, inflation has declined, and the labor market is still at a very solid level."

However, the current state of the U.S. economy is not good.

In fact, one survey after another shows that most Americans believe the economy is on the wrong track, and U.S. businesses, both large and small, are declaring bankruptcy at an alarming rate.

The S&P Global Market's report updated on September 22nd indicated that the number of bankruptcy filings in the United States has surged to a frightening level, reaching 452 in the first eight months of this year, the highest level since the pandemic and the second-highest level in fifteen years.

Even ZeroHedge, a U.S. financial research institution, analyzed in its follow-up report on September 22nd that some U.S. cities have shown signs of bankruptcy due to the debt crisis, and a massive exodus of the wealthy has occurred, truly staging an American version of "Exodus."

These cities include large cities such as New York, San Francisco, and California.

According to a survey report on the financial condition of the 75 most populous cities in the United States for 2021, published by the U.S. accounting industry organization Accountingtruth in June, 61 major cities have accumulated very serious financial and debt problems during the spread of the new coronavirus, and there is not enough money to pay all the bills, including pensions, because the current debt costs are rising with interest rates.

However, the expectation of economic recession has further suppressed the improvement of fiscal conditions.

Subsequently, Jamie Dimon, the CEO of JPMorgan Chase, warned at the New York Institutional Investor Committee that "the fate of the U.S. economy will be far worse than a recession," entering a state where economic growth declines, but inflation and unemployment rates begin to accelerate, similar to the United States in the 1970s.

Now, the phenomenon of large banks continuing to close more branches every week is a precursor.

U.S. senior economist Tyler Durden warned in a report published on September 20th that the U.S. economy is now like it was at the end of the 1920s, and some hard indicators reflecting the health of the U.S. economy show that the U.S. economy is in a recession.

The U.S. economy is developing according to the script of bankruptcy, and this recession cannot be stopped by a few rate cuts by the Fed.

"Debt King" Gundlach also believes that "the United States has already entered a recession, and the Fed's substantial rate cuts cannot stop this situation from happening," and "the degree of lagging behind the growth curve is the same as the degree of lagging behind the inflation curve two years ago."

This factor has already sounded the alarm in the U.S. stock market and various employment sectors in the United States.

Former U.S. Secretary of Commerce Wilbur Ross also said on September 15th that "the U.S. economy is in a moderate recession, and a recession may come regardless of whether the Fed is willing or not."

On September 9th, American billionaire Musk also warned again about the U.S. debt economy and federal spending, saying it is "heading towards bankruptcy at a fast pace."

Currently, the phenomenon of thousands of wealthy people withdrawing from the United States seems to be revealing the secret that the U.S. economy is going bankrupt, pulling down the fig leaf of the United States.

The current chaotic U.S. election may also be becoming another fuse for the impending bankruptcy of the U.S. economy, soaring debt deficits, and inflation storm.