SIGHTBRINGER: For 40 years, the Fed’s real power has not been rates. It has been legitimacy. Trump is tearing that membrane.

This is Trump rejecting the idea that unelected institutions should be allowed to suppress national growth to preserve theoretical stability. He is choosing volatility over stagnation. Momentum over control. Power over process. That path creates booms. 

It also creates fractures. --SIGHTBRINGER

Translation: Screw London and the whole central bank model.

Libertarians should rejoice but they are too stupid to actually read anyone else's book but their own. https://t.co/ikOVQ3qnQv

— Tom Luongo (Head Sneetch) (@TFL1728) December 24, 2025

What you are seeing is a direct assault on the post-Volcker monetary regime. And it is intentional. This is a signal. Here is the structure underneath it. 1. Trump is openly breaking the Fed’s myth of neutrality For forty years, the Fed’s real power has not been rates. It has been legitimacy. The belief that: • monetary policy is technocratic • markets are managed by experts • politics stops at the Fed door Trump is tearing that membrane. By saying “anyone who disagrees with me will never be Fed Chair,” he is doing something far more disruptive than threatening independence. He is declaring that the Fed is already political. He is just willing to say it out loud. Once that happens, the spell is broken. 2. He is reframing markets as a political instrument, not a natural force Trump’s core claim is simple. Markets are behaviorally managed systems. They respond to incentives. They respond to fear. They respond to rate expectations. When good economic data causes markets to sell off, it reveals something rotten in the system. That rot is rate repression logic: • growth triggers tightening • success gets punished • expansion is capped preemptively Trump is rejecting that logic entirely. He wants markets rewarded for strength. He wants inflation managed after growth, not before it. He wants risk-taking restored as a national objective. This is a return to explicit growth primacy. 3. This is a regime shift toward fiscal dominance, openly stated The old model was: • Fed first • Treasury adapts • markets price policy restraint The new model Trump is pushing is: • growth first • markets absorb volatility • Fed follows the political mandate That is fiscal dominance without euphemism. Rates become a tool. Markets become a scoreboard. GDP becomes the legitimacy engine. This is how emerging powers behave. Trump is attempting it inside a reserve currency system. That is explosive. 4. The real target is time, not inflation Trump is obsessed with one thing he never names directly. Time. High rates stretch time. They delay investment. They freeze projects. They slow capital velocity. Trump wants to compress time. He wants projects funded now. Markets moving now. GDP compounding now. This aligns perfectly with the broader acceleration era: • AI compresses development cycles • capital rotates faster • political patience collapses • long-term credibility matters less than short-term momentum In that world, a central bank designed for slow decades becomes a liability. 5. This increases tail risk across every asset class If Trump succeeds, here is what follows: • higher inflation tolerance • higher equity volatility • steeper yield curves • weaker long-end bond credibility • stronger real assets • capital flight into things the Fed cannot print Gold. Bitcoin. Equities with pricing power. Anything tied to growth velocity. The Fed becomes reactive. Markets become political. Risk becomes explicit. No more adult supervision theater. The real truth: This is Trump rejecting the idea that unelected institutions should be allowed to suppress national growth to preserve theoretical stability. He is choosing volatility over stagnation. Momentum over control. Power over process. That path creates booms. It also creates fractures. But once a country decides that growth is a political mandate rather than a monetary byproduct, there is no going back. The system changes character. And everyone holding “safe” assets needs to understand what that actually means now.

The Fed will increase the pace at which it’s pulling back its support for the COVID economy

From Martin Armstrong.

I have been warning that the Federal Reserve is the last independent central bank and despite all the hatred hurled at it from primarily the goldbugs, the real picture is starting to surface if anyone cares to look objectively. The Fed will increase the pace at which it’s pulling back its support for the COVID economy as inflation surges. Powell has said that he expects to raise interest rates three times next year in 2022 which is really a MAJOR departure from Europe, the Bank of England, and Japan. 

This is effectively declaring war amounting to a sharp policy shift in contrast to the other central banks pleading with the Fed not to raise rates. Powell also said that he will shrink its monthly bond purchases at twice the pace it previously announced, ending QE altogether in March. You MUST understand that the US is the ONLY place for capital to flee and Powell is staring international capital flows straight in the eye.

By raising rates, Powell is NOT merely trying to fight inflation. He realizes that the inflows are intensifying and raising rates may steer some of that money into the bond market, which is the ONLY real market standing. By doing that, the money, he hopes, will be diverted from investing as in real estate and stocks which will help to cool those markets. So there is far more going on behind the curtain than meets the eye. This is declaring World War III in the financial markets.

Powell was asked at a news conference Wednesday what specifically had caused the Fed to pivot to a tighter credit policy. He said:

“It was essentially higher inflation and much faster progress in the labor market." 

The key here was that Powell acknowledged the possibility that inflation WILL NOT decline as expected next year. This is because the Fed is now realizing that Europe is doomed and the real risk here, besides the shortages, is that there will be a massive capital flight to the dollar.

“There’s a real risk now, that inflation may be more persistent and that may be putting inflation expectations under pressure, and that the risk of higher inflation becoming entrenched has increased. I think part of the reason behind our move today is to put ourselves in a position to be able to deal with that risk.”

Powell is acknowledging what our model has been forecasting - a dollar bull market, stagflation, and rising interest rates. The Fed is clearly shifting its attention away from reducing unemployment and they realize that the Democrats is constantly extending benefits when the number of vacant jobs has never been so high, is creating not just a false image of the economy, but it is forcing wages higher which has been propelling inflation.

 

There will be those who criticize the Fed using the old traditional analysis that raising borrowing costs too fast could stifle consumer and business spending threatening to weaken the economy raising unemployment. This is the traditional view looking at everything under the old domestic economy tools and ignoring international capital inflows.

It has been the housing cost increases, which has also impacted apartment rentals in addition to homeownership, which make up about one-third of the consumer price index. We have a flight from the urban centers to the suburbs and flights from the high-taxed states like California and New York. Overall, housing costs have been rising at a 5% annual pace recently. Restaurant prices have jumped nearly 6% as labor shortages hit that industry in particular. 

Be sure to read this companion piece.  The money for COVID is ending and so, too, will the COVID hysteria in 2022.  Inflation shall replace that horror.