The Fed IS the Ugly Truth by Raúl Ilargi Meijer – The Automatic Earth
This Fed thing just keeps going on, and it needs to stop. There is nothing in the discussion about the Federal Reserve these days that has any value other than it provides even more proof that the Fed has killed off the most essential elements of what once made the US economy function. All markets, stocks, bonds, housing markets, all price discovery, all murdered. No heartbeat. Pining for the fjords.
And instead of addressing that, and I’m not even talking about addressing fixing what is wrong, all I see is neverending stuff about Jay Powell using, or not using, terms such as “patient” or “accommodative”. Like any of it means anything coming from him and his ilk. Other than for making ‘investors’ a quick buck. Like a quick buck could ever trump the survival of entire market systems.
People discussing whether Jay Powell is doing a good job all miss the point. Because Powell should not be doing that job in the first place. The Fed should not have the power to manipulate the US economy anywhere near as much as it does. Because that power is perverting America like nothing else, and the US economy will never recover as long as the Fed holds that power. Is that clear enough? Do we understand that at least?
Powell apparently changed his tune Friday in order to let the mirage that the stock market has become, live another day. Almost literally a day, since it will come crumbling down no matter what he does, just a day or so later. It’s all some message hidden in his use of “patience” or “accommodative”. Nothing he does will have any effect in the medium or longer term, and he knows it.
The entire US economy today is about the quick buck. It’s about tomorrow morning only because nobody has the guts to look at 10 years from now. That makes Jay Powell and his whole Federistas staff worse than useless. It makes no difference if perhaps jobs are doing well; the pre-Powell Fed launched a bubble and that bubble will burst one day, a whole series of them will.
The only good thing he can do is get out of the way and let the markets be the markets, to let them discover prices by letting people interact with people. But who exactly in the US has the power to make the Fed go away?
If you were one of the people who thought Jerome Powell was different from the rest of the Fed head honchos, the ones who preceded him, and I’m by no means just talking Greenspan, Bernanke and Yellen, you can now consider yourself corrected.
Powell is not going to keep hiking rates if a bunch of zombie markets keep falling like they did in December 2018, even though that’s just what we should want zombies to do, and even if hiking is the only way to resurrect a degree of normality and functionality into the markets.
Greenspan, Bernanke and Yellen, by the way, like Powell, just serve(d) to give the beast a human face, and one that the actual power brokers can hide behind. Over the past nigh 106 years since the blinded wagons rode to Jekyll island, the individual brokers may have died their natural deaths, but the institution they represented and served blindly, never did.
Seen in that light, the Fed was/is a kind of a forerunner of the 2010 Citizens United legislation that granted corporations the same rights as individual citizens. The -perverse- sense, that is, in which citizens do die, but corporations do not. So they are much more, and much more powerful, than citizens. Citizens Limited should have set a time limit, like the ones all corporations used to have, and the Fed should have had the shortest and strictest limit of all.
And you were worried about Brett Kavanaugh being named to the Supreme Court…
Just as an example of how wrong we get these things these days, Let’s turn to Sven Henrich’s piece in MarketWatch this weekend. Henrich is the founder and lead market strategist of NorthmanTrader.com, and g-d bless him, I’m sure he means well, but he gets things so upside down it’s not funny. He writes about that quick buck only, and doesn’t see the future.