Fed Meeting: Beware of Idiots Raising Interest Rates

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Beware of idiots manipulating interest rates. Oh, every single time there’s a Fed meeting, I’ll get emails, I’ll be asked, how come you didn’t do your podcast after the Fed meeting? Why bother? Okay, why bother? Every question, why even ask me that question if you’ve been paying attention to this show for a long time.

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Um, but yeah, that’s all they’ve been talking about. Big Fed meeting. Uh-oh, is it going to be a quarter point? Is it going to be a pause? What are they going to do in July? I don’t know, I don’t know, I don’t know. Oh geez, how can you play this in a trade later on in the day? Oh my God. We, how the algorithm is going to play this when traders and what Jay Powell gives his little speech when all said and done. It’s an exercise in flipping utility, people. When are you going to learn? Hey.

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Garbage in garbage out. I don’t know how the traders computers and the algorithms are gonna interpret what Jay Powell says and what’s gonna happen later on in the afternoon. I can’t concern myself with this nonsense. Quite frankly, I don’t give a damn. I really don’t. It doesn’t concern, does it concern my clients? It doesn’t concern me. Why? I’m not gonna let the Federal Reserve and what they’re gonna…

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decide to do today, decide where my client’s portfolios are gonna be five, 10, 15, 20 years down the road. Oh, trade this. Trade in crap for crying out loud. I actually looked it up. I looked it up, there was a stanza. It popped into my head. I couldn’t remember exactly, it was just great album from Coldplay. It was out around 2008, 2009. There was a song on it, it’s called Violet Hill.

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And there was a stanza there, said when the future’s architectured by a carnival of idiots on show, you better lie low. And man, that’s true when it comes to, again, it’s what it is, the big fed circus that we have today. Judy Shelton, who should be the Federal Reserve Chair.

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who should be the Federal Reserve Chair, they wouldn’t let her do it because she’s too smart for them. She’s too smart for them, she’s too bright, and she goes against convention. She’s an independent thinker. She’s an independent thinker, people who question, in my opinion, the most valuable people on the planet, quite frankly. But no, they couldn’t have her on.

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because again, she’s different than all of these other, like I said, idiots on parade. Well, she had a piece today in the Wall Street Journal and she’s talking about the Fed’s monetary policy toolkit and how it needs an overhaul. And again, somebody I’ve, you know, I revere, I’ve got a great deal of respect for this woman. She’s brilliant. And many of the points that she makes,

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in the column are things that we’ve talked about here on the podcast, on the radio show, and basically getting across that it’s a complete exercise in futility in what they’re doing. She’s talking about our nation’s debt and the type of interest we’re going to be paying on this debt and how the Fed has monetized this and how at this point in time, the Fed

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The Fed’s not sending money to the treasury anymore. The Fed’s losing money right now based upon where interest rates are. And she asked the question, which I, I’d say I’m a question to me, it’s fact. But she says in her column today, said, what if the Fed’s strategy? What if the Fed’s strategy to reduce inflation by hiking interest rates isn’t working?

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Among its consequences is a government that’s dispensing yet more money in interest payments, even as it’s repressing private sector economic growth. Again, I want everybody to be a free thinker right now. How many times have I said this again and again? How does it make sense to put people out of work and get the unemployment rate up above four or five percent? How is that good for the country?

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How is it good for the country to stamp out economic growth, prosperity? How is it good for the country? Well, because of inflation.

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The Fed’s model incorporates the Phillips curve notion that inflation and unemployment are inversely related, Phillips curve. Again, some of the things that the Fed, it’s like they’re flat earthers for crying out loud. It’s they have their weird ideas there that are proven wrong, that don’t work.

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They keep doing the same thing. We talk about hype cycles and bubbles and then blowing them up. Yeah, we got a Phillips curve here. We gotta use that. Anyway, as one rises, the other falls until there’s a discernible softening and labor market conditions. The FOMC’s approach is to keep increasing interest rates, but as the latest strong employment numbers continue to defy expectations, monetary authorities need to question their theoretical assumptions.

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No, thank you Judy. I mean, she’s much nicer than I am. She’s much, much nicer and diplomatic than I am. Yeah, they should be questioning everything.

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Instead of attempting to counter robust hiring with another quarter point increase in the policy rate, Fed officials should give more weight to keeping interest rates steady. Clarity moving forward. How many times have I said that? Keep them steady, keep them predictable. I’m sick and tired of seeing all of these Fed governors in their speeches and…

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all the business networks, they’re waiting with bated breath, what are they gonna say? And then they act all cagey. And when they’re interviewed on these different topics and they give double speak all over the place, go away. Go away. She says exactly what I’ve been saying. Let the economy work out its own approach for reducing inflation through higher levels of output.

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The supply side of the equation. Output and growth. More business capital investment is needed to enhance productivity. Don’t discourage it by increasing the cost of capital.

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I’m gonna talk about this right now because the fact that, you know, the look at the Fed’s toolkit, okay? The FOMC’s primary tool for monetary policy is to pay interest on the 5.8 trillion in cash accounts kept on deposit at the Fed by commercial banks and money market mutual funds. And this is not just American banks. These are global banks, global banks.

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Let me try to explain this to people that don’t understand. So you’re raising the rates, people put the money there, banks put the money there, because they’re gonna get a return on that money. They would rather do that than lend the money out. That’s how we’re gonna slow the economy. Since September, the Fed’s interest rate expenses have exceeded the interest income it receives on its own portfolio. Instead of…

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remitting earnings back to the treasury after covering expenses, the Fed is accumulating mounting losses from operations, wiping out for the indefinite future, a substantial source of revenue for the treasury. In the Biden administration’s federal budget for fiscal 2022, earnings from the Fed were projected to total $814 billion for the 10-year period 2022 to 2031.

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That ain’t happening right now. It’s not happening.

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Congress has allowed the Fed to become too powerful, too prominent and too political. It’s bad enough that central bank botched its handling of inflation, its most important assignment. Now it’s essential to mitigate further damage from erratic interest rate policies and pursue needed reforms of the Fed. Again, it was Judy, myself, Jeremy Siegel. There’s a few other guys out there. I think.

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Among others, a few others out there that were basically saying this whole, you know, inflation was transitory was nonsense. It was complete and utter nonsense. The zero interest rate policy that we had from 2008 to 2015 didn’t work. Take a look at GDP growth. And then they, you know, did it again. Yep. Let’s make money free again.

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Let rates settle where they’re supposed to. Rates aren’t that high right now. That’s the reality. Okay, like I said before, Fed needs to go on a damn vacation, a long one. Long one, get them all together, put them on one of those ships that sail around the world. Just go away. You’re not helping, you’re only hurting. No, but again, no, the, oh no, Jay Powell is engineering a soft landing.

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Honestly, people, I mean, we got the CPI number, PPI number, we’re tall, inflation is coming down, big drop, PPI, CPI, up, down, it’s all wonderful and great. Anybody feeling any richer? Huh? How’s your grocery bill working out for you? And this was the case before. It was the case before. Oh yeah, so great, I can go buy a TV for 150 bucks, yay.Watchdog on Wall Street.