The Business Insider actually has a rare insightful article concerning China’s commodity surge. To repeat, it is now important to characterize this activity correctly: Is it just more Chinese credit-driven gambling and speculation, or is it a genuine crack-up boom? A crack-up boom is when the public loses confidence in money and scrambles for real assets, even in a environment of poor demand. A crack-up boom by definition is hyperinflation. If the latter gets out of the bag, then monetary policy globally will collapse.

Chinese commodity trading

Various Chinese products and commodities

I am not exactly sure what this high alert activity is about yet, but we are reaching the point in which the large central banks need to respond. Already the 5-year break-even inflation index that I addressed previously is creeping higher (1.56%), as are Treasury note and bond yields. The spread between this break-even and the Fed-funds rate is too wide.

Therefore, the Fed meeting is very important in terms of real signals to market participants about inflation. This is the dilemma of too much market interference by the private- and Crime-Syndicate owned central banks. If the result of this particular powwow is too dovish, then the pendulum toward crack-up boom behavior will intensify.

As I always state, I don’t get the memos. However, because of a confluence of factors that I have laid out in Subscriber Notes, I lean toward expecting a more hawkish Fed stance. This is not because I see the Fed minions as competent but mostly because of how I gauge their criminal friends being positioned at this time. For example, a very large commercial short position (bets for higher rates) is still in play in the Treasury bond futures even after yields have moved higher since April 9.

This meeting could go either way. The worst outcome might be a token hawkish tone or mere talk (the over-worn cry-wolf ploy) from the “committee’s meeting” followed by an even greater commodity spike. This timed with some major bank bail-ins would shatter confidence in currency. That should not be ignored, as destructive crack-up booms can evolve very rapidly.