2% on the day – beer money for sure….as well the following cartoon:
For an additional 8:51 minutes of your time I truly believe you will enjoy this excellent video explanation of the Federal Reserve. In particular the part siting the “owners” of the Federal Reserve, as well the little bit on every man,woman ,child and baby “owing” the Federal Reserve.
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[youtube=http://youtu.be/Oe0fGXzKb1o]
The Fed’s Web: How Central Bank Policy Drives Currency Markets
Understanding the Dollar’s Engineered Weakness
That 2% daily gain isn’t just luck – it’s the direct result of understanding how the Federal Reserve’s monetary manipulation creates predictable currency movements. When you grasp that the Fed operates as a private institution serving its shareholders rather than the American people, forex trading becomes less about technical analysis and more about following the money trail. Every quantitative easing program, every interest rate decision, every jawboning session from Fed officials is designed to transfer wealth from savers to debtors, from Main Street to Wall Street.
The USD index doesn’t move in isolation. It’s pushed and pulled by deliberate policy decisions that create artificial demand and supply imbalances. When Bernanke launched QE3, smart traders weren’t surprised by the dollar’s initial weakness – they positioned themselves accordingly. The same principle applies today. Understanding that the Fed’s primary goal is maintaining the debt-based system allows you to anticipate major currency moves months in advance.
Trading the Debt Spiral Reality
Here’s what most retail traders miss: every dollar created by the Federal Reserve comes with interest attached, making it mathematically impossible to pay off the national debt. This isn’t economics theory – it’s trading reality. The USD/JPY pair, EUR/USD, and GBP/USD all reflect this underlying structural problem. When you’re long the dollar, you’re betting on the Fed’s ability to maintain confidence in an inherently unsustainable system.
The carry trade opportunities become obvious once you understand this dynamic. Countries with central banks that haven’t fully embraced the debt spiral model often provide better currency stability. The Swiss National Bank’s intervention patterns, the Bank of Japan’s yield curve control, even the ECB’s negative interest rate policies – they’re all responses to the Fed’s monetary dominance. Smart forex traders position themselves ahead of these policy reactions, not behind them.
Watch the Treasury auction results. When foreign central banks reduce their Treasury purchases, it signals potential USD weakness ahead. These aren’t random market events – they’re the logical outcome of a system where every participant understands the game but hopes to exit before the music stops.
The Real Drivers Behind Currency Volatility
Forget the economic calendars filled with meaningless data releases. The real currency drivers are the Fed’s balance sheet expansion, the Treasury’s debt issuance schedule, and the primary dealers’ positioning. When Goldman Sachs or JP Morgan – both significant Fed shareholders �� change their currency recommendations, they’re not providing analysis. They’re signaling policy direction.
Major currency pairs reflect this reality daily. The EUR/USD doesn’t move based on European economic data – it moves based on ECB policy responses to Fed actions. The GBP/USD volatility isn’t about Brexit anymore – it’s about the Bank of England’s ability to maintain sterling stability while the Fed exports inflation globally. Even commodity currencies like AUD/USD and CAD/USD dance to the Fed’s tune because commodities are priced in dollars.
This is why traditional fundamental analysis fails most retail traders. They’re analyzing symptoms while ignoring the disease. The disease is a monetary system designed to concentrate wealth through currency manipulation. Once you accept this reality, trading becomes clearer.
Positioning for the Inevitable Reset
That 8:51 video reveals what every serious forex trader needs to understand: the current monetary system has an expiration date. The mathematical impossibility of servicing exponentially growing debt with linear economic growth means currency relationships will eventually reset. The question isn’t if, but when and how.
Smart positioning means understanding which currencies offer real alternatives to the dollar system. The Chinese yuan’s gradual internationalization, Russia’s gold accumulation, even the EU’s attempts at strategic autonomy – these aren’t political moves, they’re monetary preparation for the post-dollar world. Trading these longer-term themes while capturing shorter-term volatility requires understanding both the current system’s mechanics and its inevitable evolution.
Keep stacking those 2% daily gains while positioning for the bigger picture. The Fed’s owners didn’t create this system to lose money – but they also know it won’t last forever. Neither should your current trading strategy ignore these realities.
Back in 1972 I read a booklet called, “How to Prepare for the Coming Crash.” Silver was between 2 and 3 dollars an ounce back then. That author ALSO pointed out that the Fed was not actually a government institution. He said if you send them a letter, their response will have a postage stamp.
Maybe I’m missing something, here, (and it isn’t that I disagree with the video in principle) but since it defines a “Free Market Economy” as one operating WITHOUT state intervention – and the Fed is NOT a state institution – wouldn’t the U.S. economy then, still qualify as a Free Market Economy?
The video also said Congress gave control to the Fed, which therefore puts the Fed – not Congress – in control. And also that Congress and the President have no say in the Fed’s regulation.
Another point I don’t quite understand is, if the Fed “distributes” money printed by the U.S. Treasury – which IS a government institution – at what point does the Fed go from distributing to OWNING the money it lends?
Anyway, if the government owes money to the Fed, but never actually repays it (except interest) isn’t that good for the government? It seems the Fed can’t EVER demand it ALL back – that would ruin its business.
A follow-up thought:
The Fed, itself, sounds more akin to a corporation – exploiting its “Free Market” situation – No intervention or regulation by a State.
Hi Dennis….hey – you’ve got some great points – I think the videos are moreso aimed at “opening the eyes” of many people in general who may still have the notion that indeed “The Fed – IS The Government” – and not an actual privately owned company (especially one owned in part by Goldman Saks!)
For me, that in itself (as well the general humor) was reason enough to have a look / view. I for one ( as a Canadian ) find the entire thing absolutely outrageous – and thought the “cute cartoons” explained it relatively well. Much better than I would of…..and I’m not nearly as cute.
Well, I do agree with the Fed being revealed as private is an important distinction to make, but the video also mis-characterizes the actual situation, as I pointed out.
The Fed seems more like a huge unregulated corporation.
But the part I still don’t get is how the money the Treasury prints becomes the Fed’s money (vs. just distributing the stuff with a reasonable mark-up for being the middleman).
Seems like the Government would be the true owner (wholesaling to the Fed for fee) and therefore no National Debt – the Fed owes the Government for trafficking its money.
Maybe I’m naïve.
Do you get the part where the Treasury’s money gets hijacked by the Fed?