The ‘What If?’ Question

I was speaking with a colleague the other day about the current shape of business, markets and so forth, when they asked me to lay out a scenario if I were to affix a “tin foil cap” squarely on my noggin, and in their words, “Go for it.” So I did.

What happened next seemed to bring abject fear into their eyes, because they hadn’t really ever considered such a possibility. Their reasoning always sided on the “C’mon now, stuff like that happens in the movies…”

Although most of that is true. That doesn’t mean thinking or “noodling” possible scenarios from this side of the conspiracy divide is either uncommon, delusional or deleterious. Quite the contrary.

For if you’ve never been in serious negotiations or situations, where the stakes are high? Trust me, you wouldn’t believe the “conspiratorial” actions that can (or will) be put into actual play. It’s another reason I grew to be a fan of constructs such as the “10th man principle,” “Chaos theory” and others.

The reason why, in not too many words, is for at one time I didn’t think things or, thinking such as this was either relevant or, constructive to business, life and more. But let’s just say, I still walk “with a limp” from when I first was shown otherwise.

So with that all said, here’s what they asked and my answer in conversation form. To wit:

Them: I’ve been reading your latest thoughts on the Fed and such. And you say what was once “conspiracy” is now basically fact. I see your point. So let me ask you this: What do you think would be a possible outcome with the Fed that no one else is currently expressing that, in actuality, is not just a possible outcome but rather, has a very real plausible argument one should consider if they were really trying to cover “all the bases” as they say?

Me: If I were writing a, let’s say, novel and wanted to use the current events for its backdrop. I would use the current state of affairs regarding the relationship of not just the Fed, but central banks in general and the President.

I don’t believe anyone thinks a situation like what I’m going to say next is even close to even being considered, let alone thought through, which is why it would make for a great book. So here we go…

Currently the table is set for two possible scenarios that could have global impact and actually reshape the entire global structure or, reshape it back to where the “powers that be” sort of speak, were trying to mold it prior. But it’s now been completely jostled out of sorts with different political fashions percolating up.

The U.S. president is just one. In the U.K. you now have their new PM – and – with it dissolves the entire picture of the E.U. and more in all of about 90 days from now with a Hard Brexit drop dead date.

So rather than “tin foil” let me put on a “Machiavelli robe” and ponder from there.

Currently from the U.S. there’s a trade envoy speaking with China’s. The possibility of any deal worth sing its praises is about nil. However, add to that, you now have the Fed meeting on Wednesday. Everyone is expecting a rate cut, and by everyone I mean just that – everyone.

So my question is: What if they don’t? And if not, why not?

Because this same “everyone” is now convinced based on Fed speakers and more that it’s bankable. But what if the Fed, along with other central bankers, have or want a different message sent for ulterior motives?

Central banks have never enjoyed so much absolute power as they do currently – ever. They are now the one’s that basically control everything.

Do you think they want to relinquish any of that new found power? Again: any?

The Fed and its now Chair has been the “whipping post” for the U.S. president. People in their class (i.e. bankers, intelligentsia et al.) have made it clear they can not stand him (President) and appear they’ll do anything possible to help oust him.

So what if the Fed, with the market at record highs, a decent GDP report, unemployment at record lows and inflation held at bay decide to disappoint the “market” with a “wait and see” argument?

Using the data as a backdrop for cover, as the “market” (this is taken as a given) sells off, the Fed will use all its media connections and more stating that it was not Fed policy that caused any market sell-off. Rather, it was the result of a poorly executed trade deals and negotiations by the President that is the catalyst.

The entirety of the Fed and all its “think tank” sycophants across the globe and within the mainstream business/financial media will, in unison, point out and regurgitate that it had nothing to do with Fed policy and everything to do with a failed trade deal.

And, for this is very important to add into this scenario – will also use, include and point to the Brexit no-deal plan as even further proof for any sell-off hoping to kill or, mortally wound two birds with one stone. Because Johnson’s rise in the U.K. is the equivalent of Trump’s here in the U.S. (e.g., populism) – and they don’t like either.

Now you may say “Well Wall Street would go nuts!” and it’s a fair point. However, Wall Street is not the Wall Street of just a few years ago. Now Wall Street or, the big money if you will, are all on the Democrat side of the ledger. You don’t have to take my insinuation for such a call, they are the ones most visible in calling for the president’s ouster – by any means available.

Do you think they would take a hit to their net worth that would do little to effect their lifestyle if it meant getting rid of him? Think about that very carefully, for it’s a very important factor in all this.

Many believe all it would take is a stock market upheaval and that would be it. i.e., He would never be re-elected. So then, after the election, the Fed and all the other central bankers use the protracted sell-off as cover to print “to infinity and beyond.” This in-turn would give rise and cover to what they deem as their “natural order of things” to be restored.

“The President would scream!” you say. “He’d point fingers and more.” Yes, that’s probably more than true. But do you think they would care if they knew what they were doing would all but ensure by Nov. 2020 it would all be over within their minds?

Again, think about that very carefully. Because nothing in their world would change except the possibility of some real backslapping and more at all the conferences and cocktail parties they attend of said “beneficiaries.”

If you don’t think the media would willingly go along with some form of scenario, then I’ll just assume you never hear of the term “collusion.” See what I mean?

You can hear the calls now across the globe: “Brexit needs to be jettisoned in such a calamitous market upheaval!” The President ruined our trade set ups and now look, he has to go!” “The President is trying to blame the Fed for his own failure!” “A No-deal Brexit was always lunacy, now look!” The headlines write themselves.

Remember, the Fed is at risk of a “market” downturn if a 25 basis point rate cut is seen as not enough. Heck, a 50 point cut might seem not enough if their language disappoints in the least. So why not just completely disappoint, “keep the ammo dry,” as they say for when they’ll need it, because they will definitely need it, using the current economy as “good news” and a most certainly failed trade scenario as the cover?

Disappoint – but with a purpose. Are you seeing the possibilities here?

Them: Holy sh#t! I was not expecting anything like that, now you’ve got me thinking in ways I don’t even want to consider possible, never mind plausible. I should have never asked!

Me: But isn’t that the real reason why you did?

All this aside don’t forget this was just a thought exercise, nothing more. But it is an exercise that has plausibility at its core, not probability. You need to weigh what part is heavier than the other and act accordingly to what actions are comfortable for you to take in a “what if” type scenario. To be clear: this is nothing but a thought exercise or just akin to reading a novel.

Personally I believe, if such a thing were implemented, with the reasoning behind it as I laid out, for that purpose, it would backfire extraordinarily so, much like this “collusion” thing is currently.

But that doesn’t mean others may think quite the opposite. Which is why it’s, at the least, worth the thought exercise. Because not ever considering the possibility, ever? Now you know the reason for why I have that “limp.”

Lunch?

© 2019 Mark St.Cyr