Vivek Ramaswamy to shrink The Fed if Elected!

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Oh, here comes the gang that can’t shoot straight, the Federal Reserve. How many people out there watch a movie? And it almost annoys you because you know that there’s a character in that movie or television show, whatever it may be, and you just know that they’re gonna screw crap up. You just know they’re never gonna do anything right. They’re just gonna make matters worse, can screw things up. Well,

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That’s pretty much my take on the Federal Reserve. And guess what? Guess what? I challenge you, challenge you right now to go back to a period of time where the Fed actually did the right thing. And I think you’d have to go all the way back to Paul Volcker. Paul Volcker and maybe Fed policy through the mid 1990s, in my opinion. Some say all the way up until 2000.

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But yeah, well, you know what? For argument’s sake, we’ll say 2000. So basically for the past quarter of a century almost, the Fed has been making matters worse. It’s been making our lives more expensive. It has slowed economic growth and prosperity here in this country. And I’m tired of it, I can’t stand no more. But again, not much that we can do.

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All right, I want to give kudos to presidential candidate, Republican, on the Republican side, he’s running for the presidency. Honestly, the guy’s a breath of fresh air. He’s a breath of fresh air and he scares the crap. He scares the crap out of the Republican pundits and the powers that be and the consultant class that’s out there. Now how do I know this? Well, guess what? I happen to do.

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do some media from time to time and I’m on with certain consultants and Republican this and consult on this campaign and I’m a part of this think tank. And again, again, they all, they all think the same exact thing, say the same exact thing. Oh, he’s great, but he can’t win. There’s no way he can win. Well, again, they want to saddle they want to, you know, hitch their wagon up.

to candidates with the most amount of money. That’s just how they operate. That’s how they feed their families. And I couldn’t do it for a living, but these people can. Anyway, Vivek, a bit of a breath of fresh air in regards to some of the comments and astute comments that he’s making. And rather than running attack ads on Fox News on a regular basis, a la Trump.

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Well, you know, he’s actually he writes, he writes op-eds in the Wall Street Journal and other publications and appears on these networks to debate issues. No, not that, not debate issues, not talk common sense. No, we can’t have that type of Socratic debate. We need inane, stupid nonsense with people making fun of one another. Anyway, I digress. I digress. Anyway, we’re talking about.

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Talking about the collapse Silicon Valley banks and bank first public Okay, why well Federal Reserve held interest rates too low for too long and they rose rates too quickly Okay That’s not inaccurate But again if I was running one of those banks it wouldn’t happen they wouldn’t have collapsed because guess what I

I don’t deal in risk that leads to ruin. Just something I don’t engage in. Anyway, Federal Reserve, Federal Reserve mandate, right? What we gotta do? We gotta keep inflation down. We gotta keep inflation down and you know what? We need full employment. That’s the mandate. And this goes back, goes back to 2000, where they put this into play and the old.

Phillips curve, yeah. Well, Vivek, and I’m gonna quote him today in his piece, he said, if I’m elected president, that will return the Fed to a narrower scope, preserving the US dollar as a stable financial unit to help prevent financial crisis and restore robust economic growth. Again, I’d like to make this perfectly clear. We haven’t had real robust.

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economic growth for a long time. I mean, real robust economic growth. Yeah, it’s since the 1990s. Since the 1990s. I know we had some we’ve had some sugar highs. We had some sugar highs. We have the the fugazi run up in the housing market under Bush. We haven’t we haven’t had real dynamic type growth.

for a very, very long time. Anyway, beginning of the 1980s, lasting through most of the 1990s. Again, that’s my point. He says, most of the 1990s, I think Alan Greenspan kind of, well, he would have, should have, could have. He should have dealt with margin requirements back around 1995, 1996, that’s what he did, his irrational exuberance speech, but he didn’t follow through. But anyway, through that period of time,

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including Vice Chairman Manley Johnson and Wayne Angel, used a framework first adapted by Paul Volcker in 1982 to do what? Stabilize the U.S. dollar. The idea was to consider the dollar’s value in terms of commodities, letting it serve as a reference point for other nations’ floating fiat currencies. This provided financial stability for two decades.

following the stagflation of the 1970s. Again, this is a debate that I get into sometimes with some of the gold bugs that are out there talking about the gold standard and the need to be on gold, and I love gold. Why gold? Why just gold? I mean, okay, you wanna make it a part of your commodity pool, but I would argue that there are other things in life that are a hell of a lot more valuable and necessary.

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fuel, oil, gas. I mean, there’s a lot of things that are a hell of a lot more important than gold. And again, this is why I believe you have to, you pay attention to commodities and your currency based upon relationship with these baskets of commodities. Anyway, beginning of the 1990s, late 1990s, the Fed’s scope changed. It included, well, you know, we gotta fix it.

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Bob the Builder, Fed the Fixer. Yep, yeah, we gotta fix it. We gotta smooth out. Yeah, smooth out business cycles.

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What are business cycles? What are recessions? What are slowdowns? They’re natural. They’re okay. Get rid of the gunk. You’re getting rid of the garbage. Bad companies go away. Good companies take a look and say, hey, how can we become more efficient? There’s nothing wrong with business cycles. Again,

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Fed’s actions exacerbated business cycles by creating transitions that create boom bust cycles instead. Too wrong? Too wrong? No, he’s spot on. The Fed now typically tightens when an economic slowdown is impending, engineering a downturn of liquidity that catalyzes a profit downturn, leading to a credit cycle downturn in which credit

events, bankruptcies, credit spreads, and financial institution failures prompt all sorts of cries for bailouts. Patterned in 2000, 2008, and here we are again in 2023. In 2000, the Fed issued six consecutive rate hikes from June, 1999 to March of 2000. Meantime, the dollar’s real value was rising.

indicating deflationary pressure, suggesting no reason to tighten. A review of the Fed transcripts from 1997 through 2000, revealed a major shift from prioritizing a stable dollar to becoming captive to academic fears that further wage gains might cause inflation. Again, another thing that Vivek just brought up that I consistently bring up all the time.

sick and tired of hearing that, yeah, the only way we’re gonna fix inflation is to put people on an unemployment line.

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You are, again, think about that for a second. We need to, we need to destroy the economy in order to fix it. We need to put people out of work. We need to put people on government assistance and food stamps in order to fix inflation. It’s horse manure. It really is, but again, they keep saying it again and again and again and.

You know, I guess a lie has become the truth and people actually believe this nonsense.

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Anyway, in the aftermath of this self-inflicted recession, the Fed overreacted by pushing the federal funds rate to then a record low of 1%, holding it there even though the economy was rebounding. The dollar’s real value fell below the well-established 20-year range that the previous Fed regime had worked so hard to achieve, which should have told the Fed that emergency liquidity was no longer needed.

By ignoring this major inflationary signal, the Fed planted the seeds for the next crisis, which arrived in 2008. From 2000 to 2007, the Case-Shiller National Home Price Index rose 73%, reflecting a boom in real estate. But in real dollar terms, in terms of commodities, housing prices were up only 1.7%. The weak dollar transmitted false price signals

that resulted in the misallocation of capital. Always does. Always does. A benefit of stable dollar is that it maintains the balance between debtors and creditors. Sudden change in that balance is the essence of a financial crisis. 2008, trailing inflation caused by the dollar’s multi-year weakness met new.

deflationary forces as the dollar soared 36% in three months. This shifted the balance abruptly, culminating in the destruction of Lehman Brothers and other major investment banks. Quantitative easing was announced the next month, basically providing liquidity, but its only chance of working depended on following the approach that was used by Mr. Johnson in 1987.

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Instead, the Fed rolled out four rounds of quantitative easing, all of which would have been unnecessary had the Fed not ventured away from dollar stability. Then what did this all lead to, led to asset bubbles that we’ve had over the past few years? The signs were right there. They were right there. In February 2021, consumer price index still below.

but approaching the Fed’s 2% target, the dollar’s real value returned to its three year stretch of pre-COVID relative calm. This was a sign to stop even reverse asset purchases, normalize sales, stabilize the dollar. Instead, the Fed bought an additional $2 trillion of assets which provided fuel for speculative securities and allowed CPI to race to a peak of 9.1%.

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The Fed waited for labor cycle, labor market indicators, including wage growth, then tightened into an already slowing economy, extending a familiar pattern. Again, we all know everybody’s gonna be hanging on every word, what’s coming out of the Fed, what are they saying? Again, it’s not because they know what they’re talking about, it’s basically, I listen in to see what they’re gonna break.

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What are you gonna shake up? What do you guys have in mind in regards to destabilizing our economy? Vivek points out as well, and this is fascinating. During the only stable dollar eras of the last century, annual GDP growth has averaged 4.9% during 1922 to 1929, 4% in 1948,

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to 1971, 3.7%. This is GDP growth, 3.7%, 1983 to 2000. The volatile dollar from 2000 to 2022 saw average growth of a paltry 1.9%. Had the dollar remained stable since 2000, with an enduring set 3.7% growth, the economy would have nearly been 50% greater than it is today.

and we would have avoided multiple crises. Think about that for a second. Our economy would be 50% greater than it is today.

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I hope the Fed shows up and says, we’re out, we’re done, we’re not doing anything. You don’t need us anymore. You don’t need us anymore, let rates do what rates are going to do.

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Anyway, Watchdog on wallstreet.com. Watchdog on wallstreet.com. Have a good one.