Wednesday, May 1, 2024

In the #News #Politics #Economy - Listen to the Invisible Hand, Not the Fed

“If you don't read the newspaper, you're uninformed. If you read the newspaper, you're misinformed.”

“Whenever you find yourself on the side of the majority, it is time to reform (or pause and reflect).”

― Mark Twain

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Listen to the Invisible Hand, Not the Fed

While this title/headline plays into the “End the Fed” conspiracy theorists, we know what it means. We do not care what the majority believes. The Fed has/had a purpose in the modern economy and financial system. Ending the Fed will curtail capitalism, specifically the price discovery mechanism that creates more opportunity, freedom, and innovation than all the combined efforts of centrally planned economies throughout history. The Marxist basically stop reading at this point.

Government, driven by short-term and greed, co-opted the Fed's necessary role through the adoption of one interest rate policy rather than twelve independent ones, and by forcing the Fed to stimulate through purchases of US Treasuries (public sector) rather than commercial paper (private sector). The Federal Reserve maintains 12 independent Reserve Banks that used to manage distinctly different regional economies. The United States; therefore, jumped the financial and economic shark, long before the tinfoil hat crowd started chanting End the Fed, buy Bitcoin.

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If the Fed Reserve has been co-opted, who do we listen to?

The invisible hand runs the show, and we talk about its impact on the economy, stocks, and Fed specifically in the Economy & Stocks and US Bonds Reports. The Fed, while highly glorified and followed, does not control trends. What trends are we watching? Trust me, it's time to start watching and understanding. 2024 will mark the beginning of the end of normal, and introduce the majority to their new roles as economic bag holder.

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