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The Incompetent, Delusional, Disingenuous, Dangerous Fed

That’s right. In the pursuit of its inflation mandate, the Fed has been incompetent, delusional, disingenuous, and dangerous. And despite Wall Street’s and its captured media PR crowd’s cult like worship of Lord Jaysus Powell, and the patriarchs of central bank alchemy, Greenspan, and Bernanke you should harbor no such illusions.

The Fed is good at only one thing, self exculpation. They always find perfect reasons for blaming anything but themselves for the messes they make. This massive persistent inflation we find ourselves saddled with is the result of their self delusions.

And now they are not only behind the curve, the curve is outrunning them at an ever greater margin.

First let’s look at the conventional “inflation” measures, which don’t even tell the whole story because they don’t include housing prices. Instead, they make up a gerrymandered excuse of a statistic based on tenant’s contract rent, not market rent, as a means of suppressing the housing component from the current 14.8% annual rate that it should be based on the NAR’s comprehensive national data, to 5.7%. That 9% difference applied to the 40% of core CPI represented by the housing component shaves a full 3.6% off top line CPI and all other government measures that pretend to include housing. So instead of the currently reported core rate of 5.9%, if housing were included at the correct rate, the top line core CPI reading would be 9.5%.

Supporting that is the fact that Core PPI Final Demand for Consumer Products was reported at 8.3%. That’s the wholesale prices for everything sold to consumers in retail stores and online. It doesn’t include housing, by design, but it supports the fact that core inflation is closer to 9% than 6%.

Meanwhile, the Fed has the Fed Funds target set at 1.5%. Behind the curve you say? It’s not even on the racetrack. It’s in the infield toile taking a dump while inflation races ahead, completely unhindered by the Fed’s constipation.

The Fed may want to conveniently dredge up the memory of Milton Friedman when it suits them and forget him when it doesn’t. We, however, remember what is certainly Friedman’s most famous utterance. “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” A study of the past few years of Fed policy history proves this truth, yet again. 

Now we see that not only is the Fed taking a dump on the infield while inflation races past the latest curve, but the Fed can’t even keep up with market interest rates. After all, the market sets rates. The Fed just plays make believe. It’s a show for investor consumption. Wall Street and its media handmaidens act as the carnival barker. Don’t fall for this crap. Pay attention to the facts. The Fed is running a freak show while consumers and investors are getting killed.

Consumers are blameless of course.  Investors are not, because they buy into this Fed mirage and help sustain it.

Then there are the traders who understand the game, and learn how to profit from it, often only after years of painful experience with counterfactual Wall Street shibboleths. You know who you are. I’ll do my best to help you cut through the Fed’s delusions, and Wall Street’s religious intonations of support.

 

 

 

 

 

 

 

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