Just What Is the Fed Supposed To Do Anyway?
GUALFIN, Argentina – According to several headlines, the U.S. stock market rose yesterday “ahead of Fed.”
The Dow was up 229 points – or 1.4% – for the session.
And so, we return to poor Janet Yellen. Tomorrow, much of the world turns its lonely eyes to the Fed and its chieftain.
The Fed has as much as promised to make the blind see and the lame walk. It claims that it – and it alone – is capable of improving the U.S. economy and, by extension, the world economy.
People will earn more money. They will live better. And they will have less to fear from financial calamities, such as those that happened before the Fed was set up in 1913.
Master of the Universe
“Maybe being a central banker is not like being a car mechanic. Maybe it’s more like being a judge.
“Judges don’t have to come up with new tools, like quantitative easing. They’re not supposed to use unconventional methods. They’re not expected to improve the world, for Pete’s sake.
“Judges are just supposed to apply the law and come to the same judgment tomorrow that they made yesterday. The key feature of a judge’s role is a lack of innovation. You murder someone… the judge throws the book at you. Easy-peasy.
“Murder is murder every day of the year… Saturdays and Sundays included. It doesn’t matter what the unemployment rate is.
“Judge’s don’t have the world watching… anticipating their next move; their next move is supposed to be just like their last move. And they don’t have to care what happens after they render judgment. Their job is simply to render the correct judgment… every time… just like the last time.
“I bet judges sleep better at night.
“Maybe that’s the way central banking is supposed to work, too. It’s not for me to worry about the jokers who have gambled on low rates. What do I care if their stocks go down?
“But wait… if they go down too much… too fast… we could have… hmmm… a situation on our hands. And it could develop into a very big mess… the biggest mess in world history.
“Oh my… is it morning yet?”
Reprinted with permission from Bonner & Partners.
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