Most Reckless Fed Ever: “Real” Federal Funds Rate Now the Most Negative Ever

Even most junk bonds have negative “real” yields. And the Fed is still fueling this madness.

By Wolf Richter for WOLF STREET.

After a year of brushing off inflation as temporary, while inflation spread deeper and further into the economy, and got worse month after month, the Fed is finally talking about tightening. But so far, it’s just talking about it. It’s still repressing short-term interest rates to near 0% – with the effective federal funds rate, which the Fed targets with its interest rate policy, at 0.08%. And the Fed is still printing money hand-over-fist, though at a slightly slower rate than two months ago.

Meanwhile, the broadest measure of inflation, the Consumer Price Index (CPI-U) jumped by 7.04%, the highest and worst since June 1982, according to data released by the Bureau of Labor Statistics today. But we cannot compare today to 1982:

  • In June 1982, inflation was coming down; now inflation is spiking.
  • In June 1982, the effective federal funds rate (EFFR) was 14.2%. Today it’s 0.08%.
  • In June 1982, the Fed did not engage in QE; today it’s still massively buying assets.

So now we have the bizarre situation where the EFFR is 0.08% and CPI-U inflation is 7.04%, and the inflation-adjusted EFFR, or “real” EFFR, is a negative 6.96%, the most negative real EFFR in the data going back to 1954:

The “real” interest rate on savings accounts and CDs is similarly negative in the -7.0% range. The real yield of short-term Treasury bills is similarly negative in the -7.0% range.  Even the 10-year Treasury yield, now at 1.7%, is -5.3% in real terms.

Even most junk bonds are traded with yields below the rate of inflation. The average BB-rated “real” junk bond yield is -3.3%. Taking more risk, the average B-rated “real” yield is -2.0%.

You have to go to CCC-rated junk bonds – “substantial risk” of default – to get a yield above the rate of CPI inflation. Here’s my cheat sheet for corporate bond credit ratings, and you can see how far down you have to go and how much risk you have to take to beat inflation.

What the Fed is doing is called “financial repression.”

The Fed’s year-long refusal to deal with inflation, while talking down and brushing off this worsening inflation, after having triggered it with its monetary policies, including $4.6 trillion in QE – let’s just stick to calling it money-printing – in 22 months, cements this Fed under Chair Powell as the most reckless Fed ever as seen by the “real” EFFR chart above and by the Wealth Disparity chart below.

The cost of inflation is borne by the working people whose performance raises get eaten up by higher prices, and whose pay increases to deal with inflation get eaten up by higher prices.

But there were huge beneficiaries of these monetary policies: The folks who held the most asset, because these monetary policies had the effect of inflating asset prices across the board, and the wealth of the wealthiest 1% of households spiked, creating the biggest and worst wealth disparity ever to the bottom 50% and even to the bottom 99%, based on the Fed’s own wealth distribution data.

Wealth here is defined as assets minus debts. My Wealth Effect Monitor compares the wealth of the average household in each category. Note how the wealth of the already coddled 1% households spiked starting in Q2 2020 (red line), far outdistancing all other wealth categories, a testimony to the Fed’s effort to enrich the wealthiest the most ever during the crisis – and now the little people now get to pay for it with higher prices that the owners of these assets pass on to them. Here is my “Wealth Effect Monitor“:

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  159 comments for “Most Reckless Fed Ever: “Real” Federal Funds Rate Now the Most Negative Ever

  1. Phoenix_Ikki says:

    Most Reckless Fed Ever or Most Worthless? Weimar Powell is sure living up to his predecessors worthlessness, at least the 4 last in charge.

    This clown manages to give Greenspan a run for his money…no easy task there to make the guy that argued for there’s no irrational exuberance in the market right before 08 and said it with vulture looking like straight face.

    • Bruce says:

      Powell is not stupid nor was the last 4 .the USA public are stupid they are being screwed big time and do nothing about it.FED mandate 0 to 2% inflation .whats being done about it NOTHING .Fed lets stoke the fire even more because the public love being screwed and lied to.You cant make this shitshow up even if you wanted too.Expect it to get much worse .there is no such thing as a free lunch.who pays the idiots who dont fight back.History is full of it

      • historicus says:

        “do nothing about it” “don’t fight back”

        What would you suggest?

        • Winston says:

          Since this constant bubble/bust situation persists only because those powerful enough to correct the mechanisms which give us those benefit from NOT correcting them, all I can say is that any solution would absolutely require an attentive, intelligent, and informed public demanding it.

          We are SO far from the latter that it isn’t funny. So, bend over and get out the KY.

      • suny129 says:


        The fact is top 10% own over 90% of Wall St Wealth and the bottom less than 10%!

        An average Joe living by check to check, with not even $400 in savings cares little about the stock mkt or the Wall St except reading headlines! Majority know very little about finance or the Fed!

        Of course in case crash. s/he will pay dearly. The top ruling class of 1% who own over 50% of wealth know this and care little. So is the complicit, the MSM owned by mere 4or 5 mega Corps. Nothing here, move on!

    • Yamo says:

      but, but, but this criminal Jerome Powell will be re-elected ??????
      LOL, how distorted is all the picture.
      The real streets must know who real culprits are ………….
      And burn alive Jerome´s head

    • Swamp Creature says:

      What kind of advice is J Powell getting from his 150 PHd’s on his staff? Surely they must recognize that hey “you’ve got a problem”

      • Phoenix_Ikki says:

        Ever heard of group think bias? Plus even if they know what’s the right thing to do, we don’t know the dynamics inside the FED…for all we know it could be just as toxic of a working environment as majority of Corp America. For a rank and file to speak up against the ones in charge…unless you don’t like your job or have nothing to lose..

        This is all assuming these PHds aren’t complicit the same way as Weimar Powell and his close circles.

      • historicus says:

        It is my opinion, and it was further confirmed by his new attention to climate change, gender equality and inclusive employment.
        The WSJ touched today upon how the Fed could start making it difficult for banks to deal with “fossil fuel” companies.

        “He (Powell) also said climate stress tests for banks will likely “be a very important priority” in supervision. “I think it’s very likely that climate stress scenarios, as we like to call them, will be a key tool going forward,” he added. ……the left wants the Fed to use stress tests to make banks reduce and eventually eliminate financing for coal, natural gas and oil development. Banks would have to adjust their balance sheets to take account of the risks from government climate policies like mandates, regulation or carbon taxes . To pass the climate stress tests, banks would have to liquidate fossil-fuel assets. This is political allocation of capital.”

        This sounds just like Blackrock, doesnt it? The share voting power of Blackrock and their coercing of boards of directors to march to the beat of Blackrock’s causes has been well documented.

        The power of “coincidence”.

        • Jim says:

          coal, oil and carbon emanating industries are the most overvalued, bubble stock in history.
          They are valued on their claims on resources, that if you would dig them up and use, would end the world as we know it. (6C global warming or more – ON AVERAGE)
          So while we are still in this phase of business as usual, it cannot logically continue. You would see a catastrophic outcome not seen since the extinction of the dinosaurs,
          There can only be one outcome: stop emitting carbon

          That means there is a huge carbon bubble on wall street, companies are completely mispriced.

          This is the reason, why such policy is implemented, it stands no alternative, what ever you dream up (planting trees or sucking your old trucks emissions out of the atmosphere 10 years down the road and similar nonsense)

  2. Jackson Y says:

    The Fraud Reserve is still buying treasuries & MBS at a $90 billion/month pace as of today.

    They are still in “talking about it” mode. QE’s end scheduled for March, maybe first rate increase in March, maybe balance sheet reduction later this year. But nothing’s set in stone until they actually do it. If the markets crashed before then, they could still back off, and the insider-trading scumbags always do everything in their power to prop up the markets.

    In a previous generation, FOMC officials would simply take action immediately. They weren’t obsessed with having to give Wall Street 6-month notices of any policy shifts to prevent “market tantrums.”

    • qt says:

      Previous generation of FOMC officials also weren’t “day trading” on their policy shifts. I mean if you are gonna dump, you might as well do that and then let everyone know of the shifts.

      • LK says:

        The fact they aren’t acting is because they would be acting against their best interest instead of acting in the interest of U.S. society.

        I take it for granted now that the phrase “capitalist society” is a bit of an oxymoron, because capitalists don’t give one fudge about society. Just themselves.

        • The capitalism you are describing is just good old fashioned feudalism . . . in a new form. Powell is the new “KING”, the PhD’s surrounding him are the new “COURT”, all the major “FUNDS” are his treasury, and Wolf is the new Robin Hood! What goes around; comes around. History repeats itself.

        • Wisdom Seeker says:

          Saying “capitalists don’t care about society” is entirely wrong.

          The vast majority of a nation’s capital is in its ability to organize its people to work productively together. That IS society, and a healthy society is vital to the success of any capitalist.

          But among any group of true capitalists there are some robber barons who have forgotten that key point.

          This is why enemies who cannot attack militarily will often seek instead to sow dissent and unrest within a country – even if it doesn’t cause a revolution, it brings down the economy and makes the opponent weaker and less of a threat.

      • nnn says:

        FED is very busy trying to enrich themself

        • sunny129 says:


          Read the charter of FED when formed in 1913. They are owned by member BANKS! There is nothing secret about it! If they have to they will, without question, bailout the banks just like in ’09. Without primary dealers ( the same banks!) Govt cannot sell/trade to create/raise money! Same case with soreign Govts all over the world.

          Man on the street is of no consequence to them. Just political rhetoric to appease the Congress and the masses.

    • historicus says:

      The Fed is SO LATE…..
      But why arent there hard and firm guidelines….
      ie inflation can never get 2% above Fed Funds, Money supply can not be expanded more than 5% (or some GDP calculation) etc…

      The Fed was supposed to expand the money supply to meet the expanding economy, NOT to goose all assets and promote ANY inflation.

      Too much latitude ….too much power to do, and to DO NOTHING.

    • Nathan Dumbrowski says:

      I don’t think it can crash anymore. Honestly. I do not believe that the stock market could do more than dip at this point. With AI/algo trading going on the market only goes higher. No matter what has been thrown it the market we only see it hitting ATH. This is not by chance or accident. Yes the US Government blasted money to every corner of the world with a hose, 100% know the GDP is levitated by the FED, sure there was a once in a century plague, home prices have never been this high, the EFFIng values are insane. But the stock market is un touchable. I no longer believe they have any intention of stopping the music

      • Rudolf says:

        This is certainly starting to look like this, and I am by no means a long-time equities’ holder but never forget the fact that the metric of a ‘crash’ has already been substituted to a large extent. I.e. we are hitting ATHs, while the capital or valuations are going down. The SPY hits highs and recovers instantly but the Russel2000 and 4000 are burning brighter than the sun.

        What I’m trying to say is the *crash* can happen basically at the same time as the crooks holding 20-30 “respected” equities get them ballooned to even greater sums, with virtual wealth to come along on top of the others’ bones.

  3. GSH says:

    We can blame the Fed but it is really our fault. We, “the little people”, put the politicians in place that made it all happen. No difference between red/blue.

    • dishonest says:

      Like the “little people” have any real say in the matter.

      • Enlightened Libertarian says:

        Well, there aren’t enough billionaires and millionaires voting for Biden to get him elected. It has to be the “little people” voting for him by the tens of millions to get him in office.

        • Lynn says:

          We didn’t choose him to run. The Democratic party did. How do you expect people to choose someone when it costs so much to run for office and the oligarchs throw anyone they don’t like under the bus. From local to national politics. I mean really, that’s naive.

        • nick kelly says:

          Where were you for the previous 4 years in a bubble? Trump wanted the Fed rate to go NEGATIVE. When JP took baby steps to tighten Trump lashed out in typical fashion calling JP ‘worse than China’ as a threat to the US.

          Read the Inaugural Oath: the incoming President promises to ‘respect the independence of the Federal Reserve’

          Trump dismissed the budget concerns of Economic advisor Cohn saying, literally ‘just print the money’.

          For most of the first three years of the Trump admin there was no Covid problem.
          It would have much easier to tighten policy then. Then he wasted the last year, ignoring and muzzling the experts and handing the new admin a hell of a mess.

        • Jim Welge says:

          “Dishonest”, “Enlightened Libertarian” and other’s disillusioned by the Fed, The Blue, and The Red!!!!!!!!!!!

          The “Little People” do have a choice. The Choice, in 2024
          is to either “Vote Third Party” or “Don’t Vote” for President!!!!!!!!!!

          There are those who feel my thinking just giveS the Presidency away!!!!!!!

          By not Voting for President, just boycotting the Presidential election, I, and everyone who does not vote sends a message to the Nuts, both Republican, and Democrat, and to the Republican National Committee, and the Democratic National Commitee, that we can totally Wreck the Presidential Elections!!!!!!!!

          If the Major Parties, and the Money Brokers behind them want anthing to go “Their Way” it will be because all of us “Little People” are STUPID ENOUGH TO PLAY THEIR GAME!!!!!!!!!!!!

          WE ALSO NEED TO DO THIS IN 2028, 2032, AND 2036!!!!!!!!!!!!!!!!


      • Degobah Smith says:

        Well, they don’t until… they do. See France 1789, Russia 1917, etc. Just sayin’.

        • nick kelly says:

          It sure didn’t work out for Russia. Tragically, in both their revolutions the head of security ended up in charge. After the Bolsheviks overthrew the Socialist Coalition under Kerensky, then after Lenin’s death the Bolshevik enforcer Stalin seized power, suppressing Lenin’s death bed warning about Stalin. Then Russians found out about real oppression, with the liquidation of the kulaks (peasants) the seizure of their farms and the first of Russia’s true Asiatic type famines.

      • VintageVNvet says:

        None what so ever, dis is correct IMO!
        Yes, WE the PEONS get to vote, but only for those who have been picked by the rich and richer and chosen for their very clear obedience to our owners rules, regulations, and requirements.
        Real question is IF this is any different than it has been for at least since the middle ages?
        Seems not, except for not having our brides done by our lords and masters on our wedding nights…
        USA is NOT a democracy for very clear reasons, eh?
        Can’t have WE PEONS running things for our benefit instead of the benefit of our owners/rulers, etc.,etc.

    • Jackson Y says:

      To be fair I think Powell is just unusually good at playing politics & being a smooth talker. That’s why in yesterday’s hearings, every lawmaker (winking at their investment gains) in both parties respected him, if not liked him a lot.

      I remember back in the days of Ben Bernanke he actually got yelled at during hearings, and that was when inflation was far less of a problem than it is today.

      • historicus says:

        Powell is smoother
        Now, that is a comfort.

      • Julian says:

        Powell is just waiting for his Confirmation.

        Once he has that in his back pocket he will act – in fact, he has already signalled it beginning in March!

        This current Inflationary Boost is temporary and will be coming down for most of 2022 – except it is going to peak in Q1 2022, if it hasn’t peaked already in December 2021 at 7% – it may have already peaked!

        Look at the year-over-year and monthly figures and you can see it peaking out.

        • sunny129 says:


          Inflation ‘expectation’ once entrenched, NOT that easy to remove that easily. It is a wishful hopium being spread around

          Study late 70s and 80s. Been in the mkt since ’82. Seen it, got affected by it. The balance sheet that NOT 8 Trillions and the rate was NOT ZRP! Supply chain squeeze and Omicron can last longer, many imagine! Price of energy is increasing by the week!

        • Red says:

          Shill Alert

        • Jaylah says:

          You have completely discounted the response lag of any policy implementation. It will be at least a year before any interest rate hike or cut in spending make an impact on inflation.

    • jon says:

      People are given no choice. Both the parties are same. The beauty of Democracy is this that it gives little people a sense of power especially when they vote. But we all know it does not work.
      Nothing short of revolution would change the status quo.

      • Augustus Frost says:

        The “little people” have never had power and no repeat of a past revolution will change it either. The best option to give “power to the people” is to devolve government to increase accountability and shrink its scope to reduce or end selling favors.

      • Lynn says:

        Well, something just short of revolution changed something in Kazakhstan recently. Even though he shot 165 people, the president there has successfully managed a coup against the oligarchs in power. He basically fired the entire parliament and heads of staff and has promised to try to get the billions they embezzled back to the country and to invest in decreasing the wealth gap.

        We’ll see how it goes. Chances are he’s just using the protests for his own good and will redistribute monies to his own family and friends, but there is a chance. I suspect if he doesn’t do some good he’ll have massive problems on his hands. I watched raw footage and saw some of the army and police lay down their weapons and join the crowd.

        • historicus says:

          I always thought Occupy Wall Street should have been over at the NY Fed.

        • Lynn says:

          historicus, yeah. I think the Jan 6 people got lost and stormed the wrong building by mistake. No wonder half of them looked confused.

          Actually, there were at least 2 protests at the FED. I dug down deep one day out of boredom and found 2 small ones that were only reported in one media. Soviet Russia has nothing on us concerning media and distraction. They’re better at media, we’re better at distraction.

      • NBay says:

        “Choice is an illusion generated by those with power for those who have none”

        The Frenchman in the movie “Matrix”.

    • NBay says:

      “Team Pepsi or team Coke, it’s still the same old neoliberal cola. The US is a turkey with two right wings”.

      Perhaps instead of the usual “civics” class it’s time to have students learn the major corporations, some corporate law, and how the WTO is organized?

      And maybe visit the “City of London” rather than DC for their history class field trip.

      • nick kelly says:

        Brit Comedy troupe on America:

        ‘Well at least they have inherited our two party system, they have the Republican Party which is the equivalent of our Conservative Party and they have the Democratic Party, which is the equivalent of our Conservative Party.’

  4. Wendy says:

    The 800lb silent gorilla in the room is what happens when the retail investor finally realizes that their government bonds are a dwindling asset, and starts dumping government bonds like yesterday’s mashed potatoes? Prices will drop and yields will rise. This, however, will be unacceptable to the FED, and that, my friends, will be when monetary stimulus will go into overdrive. We may get to the point where the only buyer of government debt will be the government itself. If you think inflation is brisk now, you ain’t seen nothing yet.

    • MonkeyBusiness says:

      Where will retail investors park their cash?

      • sunny129 says:


        Averge Joe-six pack ( 50% or more!) doesn’t have $400 as savings!
        Parking their cash! LOL!

  5. Jackson Y says:

    The main reason CPI decelerated in Dec 2021 was the big drop in crude oil prices. As of today, it’s recovered all of those losses (WTI now at $82+), so if this price holds, it’s at least another 0.2-0.3% contribution to January’s CPI when it’s reported next month.

    But the year over year comps also start to get harder: Dec 2020 to Jan 2021 month over month was ~0.4%, so the next reading would need to exceed that to keep annual inflation above 7%.

    • There’s a general feeling of discomfort when we instinctively reference the CPI to justify monetary policy change.

      I do realize it’s the best measure we have,
      but there’s no doubt the CPI measure has serious flaws. Wolf has written about it.

  6. DawnsEarlyLight says:

    Once again, any statistics from the BLS belong in the Sunday funny papers.

  7. Old school says:

    With housing costs yet to feed in fully to CPI we are probably going to average minus 7% real rates for entire 2022. Wold bank said gold should be in the $1600s by now, but gold market doesn’t really think real rates are going higher anytime soon. Right now it’s a good business. Dig it out at under $1200 and sell it for over $1800.

    • Escierto says:

      Mining companies are making huge amounts of money but their stocks are shunned like lepers. Making money is so passé – the way to go is load up on debt with no hope of ever making a profit. Then watch your stock go to the sky!

      • Jim Welge says:

        There is one little “Fly in the Ointment” to your thinking!!!!!!!!!

        This little “Fly in the Ointment” is called “Bankruptcy in a Liquidity
        Sense”. By this I mean that when a business is not paying its “Current Liabilities, namely its Accounts Payable, Current Maturities of Long Term Debt, Current Mortgage Obligations” its Creditors can force the company into Chapter 11 Bankruptcy. And, with this “POOF” goes the value of the companies Overblown, Overinflated Stock Price to ZERO!!!!!!!!!!!!!!!!!!!!!!!!!

        The again, I suspect you are being very Fecetious and know the ramifications of overloading on debt and are just being Rhetorical!!!!!!!!!!!!!

    • NBay says:

      Look for the black sand!

  8. Crush the Peasants! says:

    Because the Congress critters get wealthier and wealtheir, so why stop? Remember when Bernie Sanders had the lead in the Democrat presidential primaries? Remember how he was taken down?

  9. ursel doran says:

    Never forget that the ONLY mandate the FED really has is to insure the profits of the member banks!!
    Banksters got the fully captured SEC to approve their dark pool trading platforms so they and their robots, can front run events they KNOW are coming with their trading obscured from prying eyes.

    Problem is with their engineered boom > bust cycles this time, the banksters have to be short the bond markets probably with leverage, or the bond market VALUE diminished with the increase in rates can be a killer. Same with the attempt to let the stupidly over priced stock market down SLOWLY and GENTLY.

  10. DawnsEarlyLight says:

    Where’s Depth Charge? I can’t do my morning limbo without him setting the bar!

    • Peanut Gallery says:

      Too busy writing his romance novel

      • NBay says:

        Thanks to both of ya’s. Watched some of Powell confirmation hearings last night and needed a good laugh. Have many friends I recommend this site to, but the say it’s all gloom and doom and stay away.

        Was trying to figure out GOP/DEM posturing differences, audience targets, kinda like I do with advertising.

        And it ALL reminded me of a Dilbert cartoon….where the question was, “What is a successful meeting?” Answer: “Talk as much as possible and leave with no new assignments”, or as in this case, any possible “assignment of blame risk later on”.

        • Wolf Richter says:

          “… but the say it’s all gloom and doom and stay away.”

          I hear that too. It’s hilarious. Then these people read the MSM and there, they’re confronted with wars, civil wars, mass shootings, suicides, horrendous accidents, condo-tower collapses with lots of dead bodies, drownings, shark-ate-surfer-for-lunch stories, and the like, and they don’t think it’s doom and gloom but just normal sunny optimistic life. But when on my site, where no such gruesome things are reported, and where it’s only about finance and the economy, instead of dead bodies, well, they think it’s doom and gloom. There is really something wrong with these people.

        • Swamp Creature says:


          Turn on the local news here to get the weather and you get nothing but stories of murders, rapes, fatal accidents etc. Give me a break.

        • nick kelly says:

          In Galbraith’s classic: ‘The Great Crash’ he notes that skeptics about the stock market were considered as borderline unpatriotic.

          ‘We have no use for obstructionists’ were the words from one market bull.

  11. CCCB says:

    The fed’s MO has always been the same – let free market interest rates make their move and then slowly follow in the same direction until the direction changes. We’re approaching the beginning phase of “slowly”.

  12. Old school says:

    One thing I missed the last 14 years is that an economy that can barely grow would get so much stimulus that assets would grow to the sky. It’s not a forever policy, but I thought it had ran it’s course five years ago. I think modern economists will feed the body heroin until it has killed the patient.

    • Jim Welge says:

      Old School
      Greenspan did 2 things:

      1. Follow what went on in the “Real Economy”, actual economic and production activity (Rail Car Loadings, Aircraft tonage shipped, Ship tonage,
      Gas Pipeline volumes moved, as well as prices of Commodities (Gold, Silver, Precious Metals, Futures Prices, Commodity Prices etc.)

      2. Follow what happened in the “Financial Economy” namely the Stock
      Bond, markets and Interest Rates and Drivers of those rates.

      3. Take the Punch Bowl away from the Party table before the Markets overheated and Crashed. Small Corrections, carefully timed!!!!!!

      Obama threw Greenspans baby out with the bath water, but on the
      premise that he failed to catch the Mortgage Backed Securities Issue!!!
      The problem with this thinking is that the FDIC is the Agency which should have rung the bell about the Valuation issues for Mortgage
      Backed Securities and whether Credit Default Swaps really were the
      “Credit Insurance” which they were being sold to bankers as!!!!!!!!!!

      Greenspans approach, otherwise, should have been followed. But the
      FDIC needed to better monitor the types of investments and the Risks which Commercial Banks were taking!!!!!!!!!!!!! And the FDIC got caught
      totally asleep regarding Mortgage Backed Securities and Credit Default Swaps!!!!!!!!!!!!!!!

      Gentle Ben Bernanke, Yelsen, and Powell have at No Point exercised the
      Independence from Political Interference in their policy making which until Bernanke the Fed exercised!!!!!!!!!!!! It is this lack of Independence
      and refusal to stand in the way of Irresponsible Fiscal Policy, by allowing
      the Fed to supress rates and subsidize cheap borrowing by the government, and to create Asset bubbles by encouraging rampant
      speculation, which is the real problem!!!!!!!!!!!!!!!!!

  13. Lasse says:

    Biden: “Today’s report—which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling—demonstrates that we are making progress in slowing the rate of price increases,” the president said in a prepared statement.

  14. Pretty odd to refer to a sin of omission as reckless (not raising FFR, which really has no direct effect on bond yields, or inflation probably). If this is part of a plan to erase the nations long term debt, is that reckless? While I don’t think we will get the same benefits we got in the 50’s, the policy has precedent. Bonds here are more fungible, and rehypothecated more, than the underlying currency. What happens when you can’t buy treasuries on margin (interest rates?) and borrow against your holdings to raise cash, for stocks? What happens when investors hold bonds for the interest payments?

    • Augustus Frost says:

      What plan? “Kicking the can” into the future to try to prevent economic and financial collapse?
      Making the debt more manageable so that the government can irresponsibly spend even more?

    • Wolf Richter says:

      Maybe I should have used “evil” instead of “reckless,” to be clearer?

    • Beardawg says:


      You are so far over my head that my neck broke while looking up. You lost me after “policy has pecedent.”

      I “think” you are insinuating that leverage is huge now vs 70 years ago? If so, what is your prediction? If I misinterpreted, my apologies.

      • NBay says:

        Don’t feel bad. I looked up “rehypothecated” maybe 6 mo ago and forgot the meaning. Even my spell checker doesn’t like it, and has a red line under it.

      • Jim W says:


        Leverage is “huge now” verses 70 years ago. To look only at
        one sector, Banking, and this becomes transparent!!!

        In the late 1930’s thru late 1950’s banks had Capital (that is
        Assets minus Liabilities) as high as 40% of Total Assetts. This meaning the banks had a much larger cushion against Losses. With the
        Go Go late 60’s and later, it became fashionable for banks to expand their Return on Equity, by using much, much more debt
        to finance Interest Earning Assets, than bankers would have felt safe with in the lates 1930’s thru 1950’s.

        We are now in the position where banks can stay in business and not be taken over by the FDIC if they maintain Capital (Thats Assets
        Minus Liabilities divided by total Assets) of 5%!!!!!!!!!!!!!!!!!

        For businesses other than banks there are now, many zombie companies, which are not making money, and have dangerously high levels of debt. And this has been allowed by keeping interest
        rates at supressed levels over to long a period of time!!!!!!!!!

        While Ambrose does not make a prediction, I will!!!!!!! Rising rates will force companies which use irresponsibly high amounts of debt into Chapter 11!!!!!!!!!!! The down side of interest rate increases is that they clean up the system!!!!!!!!!!!!!!!!!!!!!!!

        Those companies which use excessive leverage and catch this issue in time may survive. Those that don’t go bankrupt!!!!!!!!!!!!!!!!!

  15. Gilbert says:

    “ The “real” interest rate on savings accounts and CDs is similarly negative in the -7.0% range. The real yield of short-term Treasury bills is similarly negative in the -7.0% range. Even the 10-year Treasury yield, now at 1.7%, is -5.3% in real terms.”
    And assuming we peasants achieve a return of -5.3% we look forward to paying income taxes on that gain. How ridiculous is that!

    • Swamp Creature says:

      Just got my 6 month statement on my Treasury MM fund. On 55K I got $4 total return. Enough to buy a cup of coffee at Duncan Donuts and pay the parking for 1 hour.

    • historicus says:

      Maybe all the holders of dollars should take a long term capital loss on their taxes.

      That would start an interesting debate….for it is a loss, and most certainly a Tax. Both deductible.

      • Beardawg says:

        Ooooh….I like that Historicus !

        Biden has not hired the 10,000 IRS agents…..”yet.”

        • Anthony A. says:

          Where’s he going to find 10,000 IRS agents with high school diplomas that want to work for $15/hr?

        • NBay says:

          How about NO salary, and 10% commission for catching laundered and/or hidden overseas money?……Bounty hunters! They’d get plenty of good financial/law degreed people…..guaranteed! Total net revenue gain!

  16. Augustus Frost says:

    Their presumed argument is that they over did it to prevent a deflationary financial crash (GFC 2008) and depression. They guessed wrong, again.

    My inference is that their unspoken justification for current policy is to reduce the unemployment rate among the disadvantaged. Haven’t heard this one mentioned in a while but it was an adjustment to their full employment mandate.

    Whether it’s on purpose or incompetence, end result doesn’t change. It’s plain dumb to believe a central planning committee (FOMC) is capable of managing an economy of 330 million to supposedly direct prosperity. No amount of data or theoretical modeling gives anyone the ability to do that. None of these people magically gain additional abilities or access to a deus ex machina upon joining any central bank. There also isn’t a “correct” interest rate any more than there is for the price of popcorn or peanuts.

    Long term increases in living standards don’t come from massive malinvestment or from unproductive borrowing and asset bubbles by mispricing risk (interest rates). No central bank can “print” real resources, (skilled) labor, or intellectual property.

    • Escierto says:

      It didn’t work in the Soviet Union and it still doesn’t work. The shelves at my supermarket are starting to resemble those of the old Soviet Union – nothing there!

    • Gsky says:

      SF Fed employee here. You can only expect the incompetence element to increase going forward. As with other areas, any existing expertise is being razed to the ground in favor of racial and gender hiring quotas HR is pushing. Obviously social justice is more important than successfully guiding the economy.

      • Pea Sea says:

        Damn, I’m going to miss all that successful guiding of the economy that we got from the Fed over the last twenty or so years.

        • Shells says:

          I needed that!

        • NBay says:

          Way to bust ’em Pea!

          Gsky is likely a troll specializing in “preying on the prejudices of the people”, as Lincoln correctly predicted would happen when all the money is in too few hands, thanks to “enthroned corporations”.

    • historicus says:

      “They guessed wrong, again.”
      Sometimes I wonder if the guessing wrong is done on purpose.

      Yellen said we werent wrong, the theories we chose were wrong.

      I would say Janet, YOU were wrong to select those theories.

      There is no consequence for being wrong in government or the Fed.

    • sunny129 says:

      Augustus Foot
      They just kicked the can during GFC without correcting any systemic flaws in the global financial system. Just bailed out the banks who brought GFC!
      Read how the Savings & Loan’ scandal crisis was resoved in the 90s and how many Banks executives went to jail. Read Prof Bill Black -head of resolution trust on you tube. Now we have crooks as the regulators!

      Create the 3rd largest ‘everything’ bubble( by insane credit creation) as a cure to two previous boom-bust cycles, brought by the same folks in the Eccles building!

    • NBay says:

      I just look at them as “super lobbyists” for the banking corps/cartel. Nothing “left wing” about them, just the opposite.

    • Jim Welge says:


      I agree with you, in your last parograph, that long term increases in living standards to not come from unproductive borrowing!!!!

      I will tho, posit that the Fed, had it not pushed interest rates to zero and held them there, on and off since 2008, would probably have prevented the assett bubble which we now have. It was obvious by 2010 that banks
      were engaging in what some would call arbitrage, by borrowing Fed Funds to buy Treasuary Bills which payed a higher interest rate than the Fed Fund borrowing. And it has become readilly apparent that the low rates have caused Speculators to push stock prices to excessively high valuations. And to go into vehicles like the site which shorted Gamestock
      and AMC, as well as speculate on Bitcoin and Crypto.

      Current policy, with its extension from 2009, has been to keep interest rates low, I think, in part, to subsidize the Federal Governments running huge deficits and spending exesssively!!!!!!!! Without the subsidized interest rates, the Federal Government would long ago found that interest costs were squeezing out other spending!!!!!!!

      I feel that a number of factors need to be considered by politicians
      of both political parties if they really, really, want to do anything to correct the current situation:

      1. Consider expanding the term of the Fed Chairman from there existing
      4 year term to a longer duration.

      2. Consider legislation to have the Fed Chairs term expire at end of the second year a president is elected, to remove the preasure for Fed chairs to cater their policy moves to either candidate for President.

      3. Require the Chairman of the Fed and all members of the Federal Open Market Operations Committee to publish, on the Federal Reserves Web site for public consumption, the Stock and Bond interests they have in their portfolios!!!!! The intent here is to discourage members of the Committee from persuing Open Market Operations and Interest Rate moves which benefit their investments, and possibly those of bankers and investment firms they know!!!!!!!!!!!!

  17. Moosy says:

    To me the most amazing is the $34,000,000 “needed” to be in the top 1%

    Or the $4,000,000 to belong to the top 10%

    To me just proof that inflation is much longer high and CPI is the lowest they can get away with. Rule of thumb is prices double every 11 years so about 7% . Last year just a little more, 20+ %

    But the real problem is not the increased CPI:

    A lot of fiscal laws are still based on $1,000,000 is very rich.

    Clearly $1,000,000 is no longer a lot and the game played is very clear: inflation will push all those millionaire taxes down to Joe Average.

    And then add the capital gains tax. Your assets need to increase more then just inflation rate. It also need to increase by those taxes just to break even.

    The exact amount is a bit fuzzy. Go with long-term cap gains and no state tax and official CPI, your stock only need to go up 8% to break even. Or if you agree real inflation was 20% and you life in California and sell your stock within a year, that stock better went up 20% * (100+35+15+3%+1%) = 32% to break even. Insane indeed.

  18. R2D2 says:

    US and Europe inflation looks on track to peak around Q2 2022. The second half of this year should be a smoother ride.

  19. DR DOOM says:

    Powell ain’t hurting. Congress ain’t hurting. Wall Street ain’t hurting. Military Industrial,Complex/Security State got all they need and can get more. Biden is loaded. Where’s the problem? Cant see it from the lofty perch of power…its a long way over there. Look I see it now! , I really do! God bless us all and Tiny Tim, ….it’s…its…. Big Pharma bringing us another Big O’ Bag O’Money! Shut the F$&k up piss ants.

    • historicus says:

      DR DOOM
      Ever notice that, without exception, those in government or with the Fed who seem unworried about inflation, who might actually say its good…


      Yellen, who spoke of inflation being something not to worry about, has at least 3 pensions…
      (U of C, Fed, Treasury)

      • NBay says:

        Yeah, unlike the top corporate (listed and PE) management, and assorted family dynasties, who are all just terrified of what will happen to them in retirement, all those fat cats in government don’t have a worry in the world…….do I have that right?

        I assume it was all in caps because it is your main point. also right?

        • historicus says:

          Corporate managements do not have the power to promote inflation upon us, a tax. (If they raise prices, they must answer to the market and competition)
          Neither do family dynasties.
          Neither adjusts interest rates or jumps the money supply on a whim.
          Nor do we pay their inflation protected pensions.

        • NBay says:


  20. John says:

    From a wtf to an EFFR, I like that!

  21. Brant Lee says:

    But gosh darn the general public just feels good about getting a raise, ignore the inflation. Living good is when that car salesman can swing a deal to get you into a honking new Ford F-150 with the fancy tailgate.

    The working class gave up on saving a long time ago anyway.
    Saving now is defined: When the government comes to the rescue and saves me.

    • LifeSupportSystem4aVote says:

      IMO, “savings” are now defined by far too many people to be the unused portion of their credit line.

    • Nathan Dumbrowski says:

      Jogging by the local JEEP dealer. Saw a nice vehicle and it was closed so I dared to step onto the lot. $71k sticker price for a model that looked average. WOW! $71k for a new JEEP list price with unknow added for extras upon signing on the dotted line. My clunker is just fine at 12 years old and 120k miles

  22. The Bob who cried Wolf says:

    So what do you recommend each tier (below the 1 per enters) do to elevate themselves to the next tier?

    • Wolf Richter says:

      Pull harder on their bootstraps.

      • DR DOOM says:

        I hove wore boots for 65 years and in the military. I ain’t seen no stinking straps on boots.

        • Wolf Richter says:

          That’s part of the problem. How are you supposed to pull yourself up by your bootstraps if your boots don’t have straps?

          OK, now you got me going. Might write a song about this :-]

          That said, my old Lucchese boots have straps, and you need them too to get into them. But they are kind of useless to pull myself up with. Too small, I guess. I can only get a finger into the loop.

        • NBay says:

          That second sentence already sounds like part of a good CW song. I have friends that could put it to music.

          Ma Boots Don’ Got No Straps

          by Wolf Richter

          This ain’t no damn gloom and doom site…..This here’s fun….

        • NBay says:

          Make that Wolf “Tulsa” Richter

  23. Depth Charge says:

    All I hear out of this administration is “c’mon, man, it’s just a blip, man.” Tell that to people who have to eat to live, or fill up their gas tank, etc. But hey, at least you’re going to get that 1099 for the junk you sold out of your garage but have no receipts for to keep the house heated. That’s income, “man!”

    • Peanut Gallery says:

      It will be “temporary”, depending on what your definition of that is. Regardless, this inflation will get eaten up by years of deflation and low growth.

      Look no further than the fate of Japan. The US is closely following behind.

    • Beardawg says:

      DC is late to the party !! Better late than never. ;-)

  24. Depth Charge says:

    The FED is a financial rapist. They and all their cronies raped the middle class and the poor under the guise of “helping,” and now the hapless are going to pay for it again, and again, and again through rampant inflation and rapacious taxation. Because, nothing screams “soak the billionaires” quite like 1099s for those who sold $1,436 worth of trinkets on Ebay last year.

  25. Mora Aurora says:

    Jawboning again, a coded cooing?
    Pigeons, throwing us our crumbs?
    Look up or best stay dumb?
    But know, to Gotham the gargoyle goes!

  26. Depth Charge says:

    A strong leader is a person who does not panic when faced with an emergency or crisis. They take a well-reasoned, methodical approach to remedy the situation without causing any more harm.

    The FED’s response to the economic “crisis” (self-induced by the government) was not well-reasoned, it was an unconscionably reckless panic, out of line and uncalled for. Instead of printing like the Weimar Republic, they should have done a little bit here and there to smooth out problems, taking great care so as to not overheat the economy.

    You should never, ever have the most fantastic returns in all assets when the most people in history are not working, and the economy is shut down. The grotesque distortions during these past few years would make even the most dishonest blush. Powell should be removed from office, for a number of reasons, but instead was awarded another term.

    • Yort says:

      Over the last two decades of the Fed “Financializing the Economy”, it has created a “Something for nothing” paper wealth inflation scheme in which participants are starting question why they do “something” versus do “nothing”…

      Who could have predicted that if you double the price of millions of people’s hard assets in less than two years, they may not want to do “something” anymore…and productivity would collapse while labor shortages would soar.

      JPow steered the global financial titanic into a giant debt spiral stagflationary iceberg, and while the stock market participants arrange the deck furniture on the Titanic while the Fed and govt plays soothing violin music, one wonders who will be smart enough to board the small percentage of lifeboats before the launch.

      But hey, at least the upper deck view was nice while it lasted…HA

      • Beardawg says:


        Nice observations, and yes, when the upper middle class checks out, which seems to be happening, that prosperity gap just gets bigger and tensions tighter.

  27. Bobber says:

    It’s hard to understand why the Federal Reserve creates such massive wealth concentration, then says it is powerless to do anything about it.

    It defies common sense, as well as common decency.

    Unfortunately, we see many signs of a corrupt or inept institution. Tune out the words, promises, and rhetoric, and observe what they actually do. It’s not good.

    Insider trading. Coziness and private meetings with investment bankers. Revolving door. History of blowing financial bubbles. Failure to recognize and admit facts on the ground. Pursuit of a long-debunked trick-down theory. Perma-rosy projections. Total lack of independence with Treasury.

    Enough is enough!!! It’s time for efficient, ethical, transparent government of our monetary system.

    • Yort says:

      From the research I’ve seen, JPow long only ETF stock portfolio has increased by around $50 million over the last two years. So perhaps a self confirming bias of getting rich by belief of intelligence and right…the fantasy is needed, else JPow might start to feel ill of how badly others are hurting. The “others” have to be seen as “Less”, like one would look at farm animals, else JPow might actually have empathy and remorse over getting rich while destroying the lives of others…

      And thus while every now and then JPow mentions visiting a homeless camp, and then does not follow through and quickly buries the thought of the “lesser well offs”…

      • Lynn says:

        I think it’s the age of Asperger’s. Did you know that clinical Narcissism and syndromes in the Autistic spectrum occur frequently in the same family lines? With a thinning of the prefrontal cortex? No offense to those with Asperger’s who mean well..

      • Bobber says:

        If Leona Helmsley were alive and running the Fed, I don’t think she’d do anything different in terms of policy. In press conferences, however, I believe she would openly reference the “little people”, who are obligated to work hard without financial security, and pay inflation taxes.

  28. Doug says:

    All this “wealth” will evaporate either through higher rates, inflation, or a financial accident. This environment is not normal and can not be saved through these increasing interventions. They go to show how critically broken things are when they have to resort to such extreme methods.

  29. red pill economics says:

    1. The inflation is intentional by the Fed; it’s a feature, not a bug. They want to “inflate away” the huge steaming pile of debt to GDP ratio. Analogy: Congress is the alcoholic spendaholic. The Fed enables them by buying U.S. Treasuries and MBS to suppress rates. This is a combo of debt monetization (think Banana Republic stuff) and financial repression. The objective here is to reduce debt to GDP to “something less.”
    2. The Fed is only jawboning here. They’re not “tightening” (actually raising rates) until they’re done “tapering” (ending QE in March). The current Fed policy is still easy/loose; as loose as it’s ever been in history. Talk is cheap. Wake me up after they’ve actually raised rates at least 100 bps (1%). In the mean time “Party on, Garth!”
    3. The Fed is deathly afraid of crashing the stonk and housing markets, since these are now proxies for the economy, and in fact are now the economy effectively.
    4. The Fed can’t really raise rates much due to massive overindebtedness as increasing the cost of money (interest rates) very much will kill the entire system (house of cards).
    5. Actual inflation is at least double the current bogus CPI number of 7%. Owners Equivalent Rent (OER)? Seriously?
    6. Inflation is a covert, regressive tax that wasn’t approved by the Legislative branch (read do-nothing Congress). It hits the poor (growing by the day) and middle class (what’s left of it) most.
    7. It seems that the 5th Amendment, Takings Clause applies here: “Nor shall private property be taken for public use, without just compensation.” Inflation is a covert tax and outright theft. The U.S. Constitution says I should be fairly compensated. If this was enforced, you’d see an end to inflation pretty quickly.
    8. All of this inflation results in negative real rates. This is going to drive investors into real assets and precious metals and not to mention it will kill the stonk markets.
    9. A centrally-planned, command-and-control economy always fails. Think (former) USSR. I’m told though that the Fed members are “the smartest guys in the room.” How’d that work out in 2000 and 2008-2009? Wile E. Coyote, Super Genius.
    10. The closest historical analogy is John Law and the Mississippi Bubble.

    Finally, for those that didn’t already know this:

    The Ten Planks of the 
    Communist Manifesto
    1848 by Karl Heinrich Marx

    Plank #5:

     5. Centralization of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly.

    “The surest way to destroy a nation is to debauch its currency.” – Vladimir Ilyich Lenin

    “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.” – Vladimir Ilyich Lenin

    “The establishment of a central bank is 90% of communizing a nation.” – Vladimir Ilyich Ulyanov Lenin

    Have a nice day.

    • Fed Minion says:

      Some very well respected financial gurus are now comparing the centrally-planned, command-and-control economy the US has adopted to the failed experiment of the Soviets. The similarities are striking, and I am concerned as once down such path, the Soviets had nowhere to turn but collapse. I think the Fed is not only playing fire with the financial and monetary systems, they are playing with fire on a social and political systems as well. I’d be surprised if some very top secret agencies that monitor world affairs are not monitoring the every move of JPow and his Fed minions as it becomes more obvious that they have destabilized the global world financial system. I’d be shocked if the Fed does not get their current powers diminished at some point in the next 3-5 years…

      The world is changing in a somewhat predictable manner, what is harder to predict is the timing. At this point what the damage the Fed has done over the last 12 months has been so obvious to so many people, one has to consider it was intentional.

      Somewhere between ignorance and treason, I guess we will find out what the Fed was really up to soon enough, for better or worse…

    • Beardawg says:

      Red Pill

      Your rivals the cranial musings of the legendary Michael Engel !!

      A bit easier to follow though. I concur strongly with #3 and #4. The next few years of history will be….. historical.

  30. jon says:

    People who think FED or politicians/policy makers are stupid have not really understood the bigger picture.

  31. joe2 says:

    In the last chart I assume the “Next 40%” is the middle class since they are in the middle percent-wise.

    Wolf, could you expand the scale so I can see how high from zero the “wealth” is?

    • Wolf Richter says:

      This chart shows the left scale from 0 to 4 million, which eliminates the 1%, and shows the “Next 40%” in all its glory. Also note that the bottom 50% still are a near-zero straight line.

      • Old school says:

        To be fair, the data would mean more age adjusted I think. I am sure I was in the bottom 50% of wealth holders til around 35.

        For the average middle class person maxing out their investments at maybe 10 – 15% of their income you need a few decades for the squirreling away and compounding to work.

        I worked so hard in mid life that all I wanted was to get off the hamster wheel and live a simple healthy life. I got out at 47 and ended up at 66 right on the 90% line. That comes from living a modest lifestyle and trying to manage investment risk although anybody investing gets a lot wrong.

        With assets so over valued and high inflation, you really don’t have much future income off of say $1 million. Maybe you can spend 2% a year ($20,000) if you want to be conservative.

  32. Yort says:

    I’m so old I remember when the Feds Fund Rate used to follow the Taylor Rule!

    Perhaps it was never really broken, just very delayed???

    62 year chart of Feds Fund Rate “Actual” versus Taylor Rule×900

    • Old school says:

      That chart tells you Fed is struggling to keep it all going lately, plus it doesn’t include adjustments for QE which has similar effect as a more negative rate.

      Hard to find your way investing when you are in new place. I guess you still have to compare investments to what you are going to get on the 10 year

      • historicus says:

        Is the Fed struggling? Powell seemed untouched by the damage he is doing by dragging his feet.

        • Old school says:

          I actually like Powell more than Bernanke and Yellen as they are academics who don’t know much about real world in my opinion.

          You can tell that it’s a rigged game by how both Dems and repubs thought Powell was doing a good job. He is allowing them to spend to buy votes which is their priority.

    • historicus says:

      Great chart…..
      The Fed will not relinquish their “game” unilaterally.
      Whimsically jumping the money supply 30%, having rates 7% below “reported” inflation (imagine if they included housing correctly).
      There must be guard rails at least….if GDP is X, money supply may increase by Y, if inflation is A, then Fed Funds must be B. Something in those ranges.

      Great reads regarding this in the WSJ today, jan 13.
      And don’t miss the book review….

  33. Yort says:

    I’m so old I remember when the Fed Funds Rate used to follow wage growth:×900

    I’m so young I only remember that the SP500 follows the Total Assets of the Worlds Major Central Banks:×4096

  34. historicus says:

    Every union in the country is contemplating going on strike.

    Grocery stores are at the plate….Kroger workers in Colorado

    This will be like wild fire, IMO.

  35. Swamp Creature says:


    In the book “When Money Dies” the prospect of general strikes was one of the justifications for rampant money printing by Dr Havenstein in Weimer Germany. It worked for a while to keep social unrest under control until it no longer worked.

    • historicus says:

      At the grocery store yesterday
      the check out lines were way down the aisles of food.

      The feces is about to hit the fan when people start being directly touched by all of this….daily
      long lines, empty shelves and doubled heating bills.

    • Swamp Creature says:

      I had to go to 4 different grocery stores to get everything I needed to survive for one week. Each one was out of some essential items. Cleaned out. The manager of one blamed the snowstorm (3 inches) which occurred 4 days ago. They are even running out of cat food.

    • Swamp Creature says:

      A good book to read to understand what is happening here with these shortages is the “Ring of Steel” by Alexander Watson, Germany and Austria-Hungary in WWI. The book focuses on the sorry state of the civilian population of these two countries during WWI. Everything that happened to these people is beginning to happen now here in the USA. Things could unravel quickly if nothing is done.

  36. Happy1 says:

    The solution is to end the Fed. It will have to start at bottom because the 1% and the political class benefit from the status quo.

    • MonkeyBusiness says:

      Will not happen. It will start from the top as usual. A couple of 1 percenters will eventually fall off the group because of infighting, etc. They’ll start the rebellion.

  37. Andrew says:

    Wolf, can you do a logarithmic scale on that “Wealth Effect Monitor”? Or at least point me to the sources you are using?

  38. KML says:

    I just sent this message to the Board of Governors of the Fed:
    >>>”8 weeks ago doofus Powell finally wakes up to the surging inflation… so, what does he do?
    1) Does he STOP pumping hundreds of Billions into the financial system through the MORONIC policy of QE and immediately raise rates to reverse the most RECKLESS Fed policy in history? …. NO!
    2) WHY? ….. Because the CORRUPT INCOMPETENT HYPOCRITES who control the Fed are more concerned that the rich people on Wall St. might have a TANTRUM than the vast majority of Americans.

    • Jim Welge says:


      The Fed Chair, Mr Powell, and the fools on the FOMC will see hell
      after they have had their party while living. And they probably
      know they are going to hell and figure they will smile and shake
      a lot of hands on the way down there!!!!

      They didnt get on the FED without being politicians.

      And they probably figure that if they do things that hurt their
      corporate sponsers, at Goldman Sach’s, JP Morgan Chase, Morgan
      Stanley, and others, that those great jobs on these companies
      boards may not be out there when their terms expire!!!!!!!

      I agree that these people, for the most part, could care less about
      the welfare of the public, overall, and are not motivated by “Public
      Service”. Sadly, they are not like Greenspan, who had a consultiing
      business after he left the Fed, and could be pretty independent!!!!

      And, yes, these people don’t have the balls to weather the “Taper
      Tantrum” and inflict what is long overdue, but necessary Pain
      to bring some reason to the excessive valuations in the market.

      My own oppinion, is that regardless of what the Fed does, that rates
      are going to go up, because the sheer magnitude of the Federal Governments borrowing will make it increasingly difficult for the
      Fed to keep Fed Funds rates down so that banks and primary
      dealers can absorb the debt being issued. We already had a taste
      of this in 2020!!!!!

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