Saturday , 30 May 2020


Classified Fed Memo Expresses Confidence In Ability To Control Economy, Stock Market & Housing Prices

…A classified Federal Reserve memo sheds new light on the Fed’s confidence in its control of the economy and the stock and housing markets…Paraphrasing the memo [it says]: We have the tools to insure that stocks and housing…move higher in a permanent uptrend.

…The Fed memo…says (again, paraphrasing the memo): The Federal Reserve’s management of policies and market expectations since December prove that we can reverse any downturn and reignite expansion of stock and housing valuations at will. We can thus guarantee a permanent expansion of stock and housing valuations into the indefinite future.

The memo also notes that there are many policy extremes such as negative interest rate policy (NIRP) that the Fed holds in reserve. In other words, the toolbox is full of shiny new tools the Fed hasn’t even used yet. This is one reason for the memo’s supreme confidence: there is no slowdown or downturn that the Fed can’t reverse within a few weeks via policy tweaks and perception management via public pronouncements and PR campaigns.

[Given the above and]…as the charts [below] illustrate, owners of stocks and houses can take the Fed guarantee to the bank: 

There is one fly in the ointment the memo mentions: the Fed is powerless to push wages and earned income higher along with stocks and housing so, while stocks and housing soar to the moon, wages will continue stagnating or losing ground as rising prices for healthcare, rent, childcare, college tuition, etc., continue chipping away at the purchasing power of earned income.

Conclusion

Those who own stocks and housing now will get richer, those who don’t will be priced out of these markets. In other words, the Fed’s policy of making the rich richer and the Devil take the hindmost is permanent.

This is an April Fool’s Day whimsy – but how far it is from what the Fed elites actually believe is unknown.

Editor’s Note: The above excerpts* from the original article have been edited ([ ]) and abridged (…) for the sake of clarity and brevity. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)