Don’t Worry! The Fed Will Fix Everything!

01 Sep

Don’t Worry! The Fed Will Fix Everything!

(They Just Haven’t Started Yet 🤷‍♂️)

‘Yeah, I think the Fed’s record on these things is wonderful. It’s almost guaranteed to be wrong.’ 

Jeremy Grantham, Co-Founder, GMO

Let’s start with this CNBC headline:


After cluelessly denying the severity of inflation as it returned to levels that hadn’t been seen in 40 years, the Fed vowed to do something about it.  So in March 2022, it began raising interest rates.   

Since then, the Fed has raised rates 11 times, pushing the Fed funds rate to the highest level in more than 22 years.

They’ve been at it a year and a half now.  Mission accomplished?  

Not even close.  

The people are still stuck with the higher prices the Fed engineered.  They’re trying to make ends meet, but 61 percent are still living paycheck to paycheck.  And that number is going up, not down.   After all, once Fed policy has ratcheted prices higher, they end up staying higher.  

As for those who are managing to save some money, the US household savings rate is down.  It dropped by a substantial 0.8 percent in July.  Which prompts the question, why would people save in a currency that is being eroded?  What kind of incentive is that for capital formation?

Meanwhile, the latest numbers show that consumer spending is up, but disposable income is down.  That is not a formula for success, either.  In fact, if anything, it explains why Rich Men North of Richmond is one of the hottest songs in America:

🎵 It’s a damn shame what the world’s gotten to
For people like me and people like you
Wish I could just wake up and it not be true
But it is, oh, it is

Livin’ in the new world
With an old soul
These rich men north of Richmond
Lord knows they all just wanna have total control

Wanna know what you think, wanna know what you do

And they don’t think you know, but I know that you do.🎵

So, 61 percent of the American people are living paycheck to paycheck.  Maybe, just maybe, the men in the Fed headquarters, the Marriner Eccles Building in Washington – just north of Richmond – will get everything under control.

Or maybe you should protect yourself and your family by owning gold and silver!