In Part 1 we debunked the Fed’s ostentatious pursuit of its Humphrey-Hawkins mandates with respect to jobs, growth and 2.00% inflation on main street. It’s an act. Even the legendary hedge fund manager, Ray Dalio, said so himself on bubble vision this AM.
As Dalio summarized it, the Fed’s easy money stimulus never leaves the canyons of Wall Street because 60% of America’s households are too broke to borrow more—no matter how low the interest rate is artificially pegged by the Eccles Building.
…. enormous amount of money… continues to be pushed on (investors) by central banks that are buying financial assets in their futile attempts to push economic activity and inflation up. The reason that this money….isn’t pushing growth and inflation much higher is that the (wealthy) investors who are getting it want to invest it rather than spend it. This dynamic is creating a “pushing on a string” dynamic that has happened many times before in history (though not in our lifetimes)…… At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps.
Still, that’s not the half of it. Even as the Fed heads gum about their make-pretend macroeconomic management function, they garble the narrative by throwing in slogans and phraseology rooted in traditional monetary policy. That is, central banking as it was conceived before it got Keynesianized under Greenspan and his successors here and imitators abroad.