This article was originally published by Michael Snyder at The Economic Collapse Blog. 

We aren’t supposed to question anything that the Federal Reserve does.  We are just supposed to quietly accept their decisions and move on.  Sadly, most Americans don’t even realize that the Federal Reserve has far more power over the economy than anyone else does.  We often talk about the “Biden economy” or the “Trump economy”, but the truth is that the Fed is much more responsible for our economic performance than the White House is.  So the fact that the Fed just made an “emergency move” that is normally only reserved for times of crisis should deeply alarm all of us.  Has the Fed made this move for a secret reason that they aren’t telling us?

On Wednesday, the Federal Reserve reduced interest rates for the very first time in more than four years…

The Federal Reserve on Wednesday cut interest rates for the first time since March 2020, as the central bank lowered the benchmark federal funds rate by 50 basis points amid progress in the fight against inflation.

The cut was larger than the 25 basis point cut forecast by LSEG economists, though interest rate traders saw a 64% probability of a 50 basis point cut as of Tuesday, according to the CME FedWatch tool. With the 50 point cut, the Fed lowered the target range for the federal funds rate to 4.75% to 5% – down from 5.25% to 5.5%.

It was expected that the Fed would cut rates.

But it was the size of the rate cut that stunned a lot of the experts.

Previously, the only times that the Fed has cut rates by more than 25 basis points has been during moments of crisis.

The last time this occurred was during the early days of the COVID pandemic, and prior to that, we had not seen it happen since the financial crisis of 2008…

Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.

So why did the Fed pull the trigger on such a dramatic move on Wednesday?

According to Fed Chair Jerome Powell, the U.S. economy is doing just fine…

“I don’t see anything in the economy right now that suggests that the likelihood of a downturn is elevated — you see growth at a solid rate, you see inflation coming down and a labor market that is still at very solid levels,” Fed Chair Jerome Powell said in a press conference on Wednesday to discuss the rate cut.

Of course, the U.S. economy is not doing just fine.

In fact, small businesses have been bleeding workers for quite a few months…

ADP data shows small businesses with 1-49 workers have been reducing workers for four months. Those with 20-49 workers have shed workers for 7 straight months.

And more workers are getting the axe with each passing day.  Here is just one recent example…

Nearly 40% of Michelin’s workforce reportedly took the company up on voluntary severance offers following news of impending layoffs.

Sources familiar with the situation told The Gazette that the company was planning to downsize only 80 positions — or about 21.6% of its workforce. Instead, about 38% of the workforce decided to accept the voluntary severance.

According to the summary of benefits provided to The Gazette, Michelin plans on “reducing production by 50% transitioning to a 5-day working schedule.”

We also just got more bad news about the housing market.

CNBC is reporting that existing home sales were down once again during the month of August…

Sales of previously owned homes fell 2.5% in August from July, to a seasonally adjusted annualized rate of 3.86 million units, according to the National Association of Realtors.

That is slightly lower than what analysts expected. Sales were 4.2% lower than August 2023. It marks three straight months of sales below the 4 million mark, annualized.

The housing market has been in a depressed state for a long time, and so this rate cut will definitely help.

But I don’t think that this is why the Fed decided to cut rates.

Right now, we are less than 50 days away from the election, and this was the last opportunity that the Federal Reserve had to influence the outcome.

A 50 basis point cut is inevitably going to provide a short-term economic boost, and the financial markets were thrilled when it was announced.

In fact, it was being reported that stock prices were “exploding higher” on Thursday…

“Stocks are exploding higher as markets absorb the Fed’s outsized rate cut,” Adam Crisafulli of Vital Knowledge said in a note to investors.

Lower interest rates help financial markets in two big ways. They ease the brakes off the economy by making it cheaper for U.S. households and businesses to borrow money, which can accelerate spending and investment. They also boost prices for riskier assets such as equities, gold and cryptocurrencies.

When stock prices go up, it makes the party that is currently in the White House look better.

By the end of the day on Thursday, the Dow and the S&P 500 had both reached new all-time record high levels…

Stocks jumped Thursday, with the Dow Jones Industrial Average and S&P 500 rising to new all-time highs, as traders cheered the Federal Reserve’s Wednesday decision to lower interest rates by a half percentage point.

The 30-stock index advanced 522.09 points, or 1.26%, ending at 42,025.19, marking its first close above the 42,000 threshold. The S&P 500 rose 1.7% to close at 5,713.64, topping 5,700 for the first time. The Nasdaq Composite surged 2.51% to end at 18,013.98.

Of course, the Fed insists that cutting rates by 50 basis points had nothing to do with the election.

But don’t let Fed officials fool you.

They knew that a rate cut of this magnitude would cause stock prices to surge.

And they waited until just the perfect moment to pull the trigger.

The “sugar high” from this enormous rate cut should last for at least a month or two.

And at this moment we are less than two months away from November 5th.

We are supposed to believe that this is just a “coincidence”, but I am not buying it, and neither should you.

Michael’s new book entitled “Why” is available on paperback and Kindle on Amazon.com. You can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

About the Author: Michael Snyder’s new book entitled “Why” is available in paperback and for the Kindle on Amazon.com. He has also written eight other books that are available on Amazon.com including “Chaos”, “End Times”, “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”.  When you purchase any of Michael’s books you help to support the work that he is doing.  You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter.  Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream, and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites.  These are such troubled times, and people need hope.  John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.”  If you have not already done so, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.