The New York Fed is doing a dog and pony road show to explain to market insiders, that yes, Virginia, it really does have the tools to control interest rates when there are $2.7 billion in excess cash in the banking system. The Fed is, after all, the great and powerful Oz. All we need do is click our ruby slippers and believe. The Fed will pull a magic wand from its toolbox, wave it around, shout “Abracadabra, rates go UP!” and voila! The market will believe and rates will magically rise, in spite of all that excess cash lying around.
Jonathan Spicer at Reuters is the first mainstream media guy to begin to pull the covers off this subject, which I have been ranting about for months. I just wrote about the credit he should get for finally giving this issue the light of day. It’s only the beginning. That post included a short clip from a Radio Free Wall Street video I posted on February 25 where I briefly and calmly raised this issue.
Just the week before, I had done a longer video about this issue. It was one of the more spectacular meltdowns that I tend to have when discussing the Fed. The following video is a condensed version of that program. I start out cool, calm, and collected, but you can almost see my blood pressure rise as I become more agitated through the duration of the rant. I hope that this helps you to understand the issue here, one of which may be that I am completely crazy. The question you must answer for yourself as you watch is who is crazier? Me or the Fed?