What is the FED doing?

Or as many indus­try ana­lysts fear does the FED know what they are doing?

What is the FED doing?

For years there have been many that feel that the FED has made a real mess out of a lot of things includ­ing the econ­o­my and the bank­ing sys­tem… 

If you feel that state­ment is not right then think about the huge mort­gage deba­cle of just a few years ago where Bil­lions of Tax dol­lars were spent to “buy out” what they called trou­bled assets. 

But when it come to doing some­thing about these so called trou­ble assets the tax pay­ers nev­er realised any return on all that mon­ey that was put into the bank­ing sys­tem…. 

If you know of an instance where the mon­ey paid out was returned to tax pay­ers Ill be hap­py to take a look because to date there is noth­ing to indi­cate that any of that mon­ey did any­thing but dis­ap­pear or at least went down a very dark hole in the ground or in the pock­ets of some mem­bers of bank­ing organ­i­sa­tions. 

The real prob­lem is not just that the FED has made some trou­bling deci­sions about many dif­fer­ent things but they have basi­cal­ly con­tin­ued to raise inter­est rates even after “most of the world” could clear­ly see that the high­er inter­est rates were not hav­ing any effect on high prices or infla­tion and in fact it is hurt­ing mil­lions of peo­ple all over the world who are now pay­ing high­er prices for car pay­ments… 

Home mort­gages are get­ting dif­fi­cult if not impos­si­ble to secure due to the high­er costs of writ­ing loans many banks and com­pa­nies are refus­ing to write loans that they were hap­py to write just three years ago. 

But not now… 

If you want to buy a house you have to pay more and more and more. 

Peo­ple are basi­cal­ly just giv­ing up on the dream of being able to buy a house because the cost keeps going up and the FED is sit­ting there basi­cal­ly say­ing that hey we know what were doing is not work­ing but were going to keep on doing it… 

Could it be that the FED just does not know what its doing … 

The ide­al that doing the same thing over and over again will sud­den­ly bring a dif­fer­ent result is as the say­ing goes the def­i­n­i­tion of Insan­i­ty… 

INSANITY folks. 

That is what is going on at the FED and they are dead set on con­tin­u­ing to do it but this is not hurt­ing big cor­po­ra­tions. 

They have the cash they don’t need loans… 

They are making plenty of money… 

But the FED con­tin­u­ing to “Act Stu­pid­ly” is hurt­ing small to mid­size busi­ness enti­ties and also upper and mid­dle class wage earn­ers. 

The longer the FED con­tin­ue to raise inter­est rates the more eco­nom­i­cal issues are going to con­tin­ue to get worse, many are afraid of a reces­sion… 

What makes it even worse is that this is pre­ventable. 

A reces­sion does not have to hap­pen if only the FED would lis­ten …. 

But as out­lined by a pro­fes­sion­al ana­lyst, this is prob­a­bly not going to hap­pen. 

Mar­ket Watch…

This Fed-man­u­fac­tured morass will deliv­er anoth­er blow to U.S. stocks in 2023, McCul­lough pre­dicts — par­tic­u­lar­ly mar­ket dar­lings that until last year could do no wrong. Says McCul­lough: “The Nas­daq COMP is our favorite short.” As an exam­ple, McCul­lough sin­gles out Tes­la stock, which he says will dis­ap­point and demor­al­ize share­hold­ers on the way down just as it ral­lied true believ­ers on the way up.

So we are look­ing at a prob­lem that is a direct result of “the Fed Act­ing Stu­pid­ly” they can­not admit that they have behaved stu­pid­ly so they will con­tin­ue to do the wrong thing over and over again…. 

Bank­rupt­cy will increase and many busi­ness­es will fail. 

Repos­ses­sions will increase and the auto­mo­tive indus­try will lay off hun­dreds of thou­sands of employ­ees. 

This is bad but the FED can­not under­stand and they can­not fig­ure out any­thing else to do because in real­i­ty they are in the wrong posi­tion to be attempt­ing to change the econ­o­my by rais­ing inter­est rates. 

Rais­ing inter­est rates will not fix this prob­lem!

Mar­ket Watch…

In this recent inter­view, which has been edit­ed for length and clar­i­ty, McCul­lough dis­cuss­es where he thinks investors should put their mon­ey now, what would turn him more bull­ish on bonds, and why Tes­la and CEO Elon Musk were at the epi­cen­ter of the “Moth­er of All Bub­bles” — which the Fed cre­at­ed and now is attempt­ing to crush.

In hous­ing, for exam­ple, lux­u­ry home sales are down. We’re see­ing a huge decline in mort­gage demand. It doesn’t mat­ter if the 30-year mort­gage rate oscil­lates between 6% and 8%, it chokes demand. That’s one of the rea­sons why Blackstone’s BREIT is under duress. It’s the largest non­pub­lic REIT and there­fore the most wide­ly held. It’s clear­ly a game of promis­ing “x” return and annu­al liq­uid­i­ty, and now they’ve achieved peak returns and are going to have to take their marks.

We have a seri­ous prob­lem that is being made worse because the FED have noth­ing in their quiver…

They have no plan except to con­tin­ue to do what has proven to NOT WORK!

What is even worse is that once they real­ize what they have done wrong they will try to start back­ing up…

That will not work either…

When the stock mar­ket starts to go way down they will then come out and start aggres­sive­ly slash­ing inter­est rates try­ing to fix the mess they have cre­at­ed.

That will not work either because it will be too lit­tle too late!

At first there were only a few peo­ple that were sound­ing the alarm about the FED now there are many many more…

But the FED is not lis­ten­ing…

When they come out and raise the inter­est rates again …

You are going to see the mar­ket react and it is going to be real­ly bad…

There is a solu­tion to this prob­lem but the FED does not have any idea how to find that solu­tion because they have shown that they either do not care or they real­ly are as stu­pid as they appear to be!

Fas­ten your lap strap folks until Pow­ell resigns noth­ing is going to change and that is what the real prob­lem actu­al­ly is here we have an old white man in charge of doing noth­ing to help the bank­ing and econ­o­my trou­bles.

As long as the FED con­tin­ue to act like this econ­o­my is the same as it was 40 years ago they will con­tin­ue to believe that rais­ing inter­est rates is the way to go but I would encour­age you to look at the inter­est rates from the 1970s to ear­ly 1980s once you see that you will under­stand all the mis­takes that the FED is mak­ing and how they will like­ly con­tin­ue to make the same mis­takes that caused so many prob­lems back in the 1970s…

If you can’t learn from past mis­takes which the FED made back then how can you expect to see some­thing dif­fer­ent because the FED is mak­ing the same bad mis­takes they made back then…