FOMC: It’s a Keynesian system, after all

Pre-FOMC, the market is “on edge”

Why of course it is!

The markets are on edge before the Federal Reserve’s policy update in the face of surging inflation

The fact that a majority of market participants think and act like this is something normal is just beyond me.

fomc

We have a body of economic eggheads who conspire meet about once a month to regulate the system. They regulate the system with a tool called interest rates (manipulated by Treasury bond/MBS buying or tapering and secondarily, the Fed Funds rate, etc.). With that tool they…

…adjust our expectations about the only trick in their bag, inflation. Inflation is the thing the Fed does when a beyond bloated, debt-ridden and morally hazardous system threatens to deflate, as in… pffffttt!

Kenesian economics at its finest.

And now that another inflationary success story is in the bag the market (AKA you, me, buttoned down Wharton-graduated professionals, the machines and of course Ma & Pa) becomes so paranoid because it knows where it came from. It knows that it is a FrankenMarket and this annoying aspect, where we have to always be looking ahead and trying to out-think the manipulators regulators and the algos’ reactions to them, makes mental flexibility a premium asset.

It can be exhausting for more casual market participants who have day jobs but still get involved with their own investing. They become subject to guru worship because after all the guru has all the answers at the ready, and boy do she and he promote them. But the reality is that nobody’s got all or probably even most of the answers. We’re too far off the charts for that. We’re in Wonderland, where only a consistently open mind will do.

Now bring on the friggin’ Fed.

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