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Here’s what I’d like to point out in all this, as talk of a recession grows and the potential for the escalating trade war to exacerbate it, there is a key element that I could be wrong about, but that I would really, really like to point out as a bit of a think aloud if you will, that could potentially have more catastrophic consequences than the recession and the trade war combined and could take both and turn them from a large and out of control fire into a thermonuclear bomb.
And that is the reaction of The Chinese Government and Trumps hostility toward the Federal Reserve.
Now for the Chinese Government I’d like to point your attention towards this and specifically the government reaction to the 2015 stock market crash:
https://en.m.wikipedia.org/wiki/2015-16_Chinese_stock_market_turbulence#2015_Government_response
Jailing people and arresting financial journalists for “spreading rumours” and possibly creating a larger bubble via moral hazard by simply giving cash to brokers to buy up stock makes you wonder how they may try to grapple with an out of control crisis that could make it even more explosive by doing something too drastic.
The other key is if a recession does hit and the trade war is in full swing, the what would already have been a lower demand for Chinese goods, coupled with the trade war, coupled with a Chinese Government bad reaction and then finally and most importantly, the potential for Trump to do something drastic with The Federal Reserve and try to replace the chairman with a lackey in order to do something incredibly stupid and risky in an attempt to jump start the economy.
And this isn’t coming from nowhere, in February the White House Counsel has looked into whether the President could remove the Fed Chairman and it could be a Supreme Court issue in the end.
Bloomberg - Are you a robot?
Breaking the independence of the Federal Reserve would send shockwaves throughout the global economy and completely remove confidence in the American financial system again turning the original two catalysts into a full blown economic nuclear bomb and that doesn’t even begin to take into account what the treasury and Trump might do or say or tweet on top of that to make things even worse.
Now this may not come to pass but it is something I was thinking about earlier and just thought I’d throw out there for consideration and whether my economic betters who have a better understanding could say if there’s anything to this.
And that is the reaction of The Chinese Government and Trumps hostility toward the Federal Reserve.
Now for the Chinese Government I’d like to point your attention towards this and specifically the government reaction to the 2015 stock market crash:
https://en.m.wikipedia.org/wiki/2015-16_Chinese_stock_market_turbulence#2015_Government_response
Jailing people and arresting financial journalists for “spreading rumours” and possibly creating a larger bubble via moral hazard by simply giving cash to brokers to buy up stock makes you wonder how they may try to grapple with an out of control crisis that could make it even more explosive by doing something too drastic.
The other key is if a recession does hit and the trade war is in full swing, the what would already have been a lower demand for Chinese goods, coupled with the trade war, coupled with a Chinese Government bad reaction and then finally and most importantly, the potential for Trump to do something drastic with The Federal Reserve and try to replace the chairman with a lackey in order to do something incredibly stupid and risky in an attempt to jump start the economy.
And this isn’t coming from nowhere, in February the White House Counsel has looked into whether the President could remove the Fed Chairman and it could be a Supreme Court issue in the end.
Bloomberg - Are you a robot?
Breaking the independence of the Federal Reserve would send shockwaves throughout the global economy and completely remove confidence in the American financial system again turning the original two catalysts into a full blown economic nuclear bomb and that doesn’t even begin to take into account what the treasury and Trump might do or say or tweet on top of that to make things even worse.
Now this may not come to pass but it is something I was thinking about earlier and just thought I’d throw out there for consideration and whether my economic betters who have a better understanding could say if there’s anything to this.