That is rule #1 for astute investors. Our Federal Reserve Bank has enormous power in how it can direct economic outcomes through its ability to control interest rates, the money supply, inflation rates, the value of the dollar and banking regulations. So “don’t fight the Fed” makes perfect sense.
However, we are currently living a paradox … the stock market keeps hitting record highs partly driven by low inflation expectations because the interest rate on our 10-year government bond has been sinking like a stone … all the while the Consumer Price Index (real inflation) has been running hotter than expected for the last three months … and the most since 1991.
Well, kind reader, can I pose another conspiracy? Since the Fed buys bonds to fund our fire-hose spending, why can’t they buy 10-year bonds … driving up their price and down their yields … suggesting “transitory” inflation?
Kind reader, I would think that sometime soon this grift will unravel at the cost of many of our retirement plans … kinda like a rubber band snapping back.
Ouch!
STAND UP FOR TRANSPARENCY!
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