Jerome Powell of the Federal Reserve will do anything to keep this stock market up. After all, he does own 55 million dollars worth of assets. It is in his own best interests to keep the asset bubble inflated. So for those who own stocks, roughly 40% of the country, he is the right man for the job. For the rest of the country...too bad.
The "dual mandate" of the Federal Reserve, otherwise known as "The Fed", a private institution put in charge of running the nations money supply, is to keep inflation at 2% and maintain full employment. This means The Fed needs to monitor goods and services, making sure that the monitored goods and services don't rise beyond 2% per year. Powell said within the last week, in his opinion, inflation has been below 2% for last few quarters, so he can allow it to rise above 2% in the future.
Anyone who follows Warren Buffet knows that he eats at McDonald's every morning. Remember the Dollar Menu? It is now called the $1, $2 and $3 menu. The cheeseburger that you can get for $1 last year is now $1.69. That is a 69% increase in inflation. When I go to the supermarket everything seems like it cost about 50% more than it did just 2 years ago. I had 30 feet of fence installed on my property 5 years ago. It cost $1800. I just added a small 4 foot gate this year and that cost $1000.
My point is that real pace of inflation is already far beyond the stated 2%. People need to live somewhere and eat. We already know that food costs have skyrocketed, now let's look at housing. The Schiller U.S. National Home Price Index shows that housing is up nationwide 62% in the last 10 years. This is great if you own a home and really bad if you rent an apartment. Increase in home prices will directly increase rental prices.
The Federal Reserve's action of keeping interest rates low is causing massive inflation that they are not admitting to. They use some ridiculous measure of inflation by pulling out Food and Energy, as if we don't need those things to survive.
As I've said in the past, I am neither a Republican nor a Democrat. I have major problems with both of their policies. Since the GOP is running the show right now, I'll vent on them. This Administration is hell bent on keeping the stock market up thinking that it is the economy. If 80% of the stocks are owned by 20% of the people, the market has little to do with the economy. Powell and The Fed appear to be in Trump's back pocket. Powell also has 55 million reasons to keep this game rolling.
It is no longer a 'market economy', rather it is completely manipulated by this Administration and The Fed. Capitalism is dead and has been replaced by Fascism, where the rules are written to benefit the few.
Since I'm in the class of 'the few', people ask me why am I complaining? The reason is because it is short term thinking and a money grab for those running the show. This type of governing that benefits those who own assets and punishes those who do not own assets will not last. This is the type of government that creates revolt.
The dilution of the dollar is socialism for the wealthy. Take money from the working class to keep asset prices artificially high for the wealthy. This is not capitalism. If you want to make America great again the do what we did when it was great.
All content is provided as information only and should not be taken as investment or trading advice. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. For further details, please refer to the Disclaimer.