FOMC Chairman Powell answers a reporter’s question at the press conference. June 13, 2018.
Your Survival Guy’s take on the Fed’s wavering on future rate increase amounts? Business as usual. The Fed’s a political beast and always fails at doing its one real job—protecting the value of your dollar.
The Fed’s been in the business of ruining dollars forever. This is nothing new. So why the uproar? Well, tech investors are getting a dose of reality with Nasdaq down 21.3% YTD. Welcome to investing.
When you have politicians pulling levers to get reelected—or in the case of Fed Chairman Powell to get reappointed—then the waters are muddied. Listen. I have the answer. But I’m Your Survival Guy, not some government appointee. What’s needed right now is at least another 100-basis point increase.
“Oh, the horror!” are the cries from those who think investing is about prices—selling to another sucker at a higher price. That’s not investing. That’s speculating. So too bad if more rate increases sink spec real estate, bitcoin, meme stocks, and other untethered assets. We’re all floating in space right now.
How about some leadership with some direction and conviction like former inflation slayer Paul Volcker? RIP. My favorite columns from Steve Forbes always deal with protecting the value of the dollar like an engine. You can’t flood the system with monetary fuel and expect it to work properly. The Fed keeps pumping in the money, spilling gas all over the 7Eleven parking lot like they’ve gone inside to get a jumbo Slurpee with the pump still running. Hello?
Action Line: Sound money requires discipline. Discipline is kryptonite to politicians and the politically appointed. They hate discipline. And because of that, expect rough waters ahead and make sure you’re comfortable with your plan. If you’re not, maybe we should talk. But only if you’re serious.
Originally posted on Your Survival Guy.
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