We are living in the “Post-Stupid Age,” feeling the effects of the stupidest public policy the United States and the world has ever seen; shutting down the world economy without comprehending the long lasting effects of such idiocy. (Dear future historians, I want credit for coining the term “Post Stupid”). In recent articles, I have described how associations of experts are inherently wrong about most everything and pointed the finger at the Federal Reserve. I’ve stated that the Federal Reserve puts too much emphasis on government compiled statistics and formulas, and using these data points gives it an unrealistic impression of our economic vitality. On April 21, Fed Chairman Powell blathered about the need to raise Fed Fund rates at a more accelerated pace due to our “over-heated” economy. Since these remarks, the S&P has dropped 7 %. Now it turns out that government produced statistics state the economy is not growing at all; it is contracting! SEE GDP CONTRACTS 1.4%. GDP reports consist of government compiled formulas, their only meaningful function is to illustrate how conceited and hopelessly inept the economics profession is. Nevertheless, the Fed relies on “GDP” and uses it as a measurement for what actions it needs to take to manage the economy for all us plebes who lack their wisdom. So what does this tell you? One week the Fed says the economy is over-heating, the next week it is twisted in knots as the numbers it relies on state the economy is contracting. Mmmm. Perplexing. Qui est veritas? No problem can ever be solved without acknowledging “truth.” So let’s acknowledge it. The truth is the Fed doesn’t have a clue, and it is a complete joke to think 7 members of the Fed Open Market Committee can magically orchestrate the entire American economy.
I will repeat my mantra over my last two articles in this space, and then I will move on to more important topics, like Kim Kardashian and Pete Davidson’s budding romance. But for now, I want all of y’all to acknowledge my wisdom. I am conceited, what can I say? I am also mean as a snake, and no one likes me. I work for myself and don’t have to lick anyone’s boot, so I am free to say what others won’t. Making me even more outspoken, I enjoy pissing people off, especially those hyper-sensitive types who walk into Starbucks in their pajamas and order $9 drinks with foreign sounding names. So here goes. The Fed sucks. It doesn’t work as advertised. Its intervention policies insult historical fact and common sense. Only in Washington DC can policy makers be consistently wrong and everyone bows down and sings hosannas in slavish obsequiousness. Once again: We don’t need the Fed to set rates, that’s what markets do. When it intervenes and disrupts markets, it causes damage. We don’t need the Fed to “slow down” the economy to protect us by making us all poorer!
Often, the Fed Chairman will appear before Congress to report on the state of the economy. Good Lord. The liars and thieves who confiscate our wealth and spend it like drunken sailors get their cues from the institution that is always wrong. I have some suggestions on how the Fed can give better advice to Congress.
Get out of the Beltway Bubble. I think Jerome Powell should go hang sheetrock for a year. My friend Jose runs a couple crews that are always pretty busy. By being on the jobsite all the time, Jay can see firsthand the supply line disruptions created during the “Stupid Age.” He can observe how a builder can’t finish houses because he simply can’t get materials. Materials are in short supply because our government shut the economy down for the first time in world history! Jose’s wife Sofia often brings lunch to crew members. Her bean and egg tacos are a veritable delicacy. Over lunch, Jose could explain to Jay why prices are rising. Houses are built in phases; clearing, footings, foundation, framing, roofing, plumbing, wiring, sheetrock, floors, trim, etc. If one phase is held up, all the subsequent phases are too. Carrying costs and rising prices are eating builders alive. Take windows, they are hard to get. If your local building supply house usually stocks hundreds of windows, but now only has 10, the price of windows goes up. Moreover, they are also more expensive on the wholesale level. If the glass, frames, enamel, and latches are also in short supply, it costs more to produce them. Being a small businessman, Jose can also explain to Jay how real world people think. After being arbitrarily shut down by the government, most businesses can’t ramp up production but so fast, and no business is going to go out on a limb and get over extended for fear of getting shut down again. Jose could explain the difference between economic theory and reality.
Perhaps Vice-Chair, John Williams of the New York Fed could go to work for Governor Ron DeSantis of Florida. The Guv could tell him why so many people have left New York and moved to Florida. I am sure the Guv would tell him that what moves an economy towards continued prosperity are low taxes, reduced government spending, a sensible regulatory environment, low crime and the protection of property rights.
As for the other the other 5 members of the Federal Open Market Committee, I suggest that they too get regular gigs. I can line them up right here in Richmond, Virginia. One of these fellas should get his barber’s license. I get my hair cut at the William Byrd Hotel. Mr. Crow has been cutting hair there for 40 years. Nothing gets past Mr. Crow. Despite having a bum leg, Mr. Crow has several side hustles and is a multi-millionaire. He loves to talk about business and politics. He knows things that Board members don’t know. The only issue I have with Mr. Crow is when he gets worked up, he gets careless, and I walked out of there one day with a Mohawk.
Another member could be a bartender at Jake’s Juke Joint and Barbeque Emporium on Jeff Davis Highway. Jake works the bar and has a real world PHD in economics as mechanics, investment bankers, plumbers, real estate developers, lawyers and small business owners detail the government policies that intrude on their economic liberties. Such Fed member could learn a lot from Jake. Should the Fed ever be disbanded, a stint at Jake’s would strengthen the member’s career prospects too. There is not much of a private sector market for pinhead academics, but people are always willing to pay big bucks to watch a skilled bartender slide a beer mug 40 feet down the bar to a thirsty patron.
Another member can work in the mailroom at one of our local venture capital firms. The guy who delivers the mail to each partner and administrative assistant really knows the pulse of the place. I don’t think it would take long for the member to learn that the availability of capital creates economic prosperity; trying to create or slow down demand via rate adjustments is in the long term an exercise in futility. My neighbor is the managing partner of one such firm. He went to Duke, so naturally he is a virgin and a bit nerdy, but I think I can arrange a mail room opportunity there.
One member could be an administrative assistant for Dr. Harrison’s veterinary clinic. A good way to judge consumer sentiment and faith in the economy is to work in a veterinarian’s office. If folks are willing to spend the money for Fido to have a hip replacement, times are good. If Fido ends up in the glue factory, times ain’t so hot.
One member could sell used cars at a place like Dapper Dan’s. Dan advertises that he would give the cars away, but his wife won’t let him. There’s a lot to be learned from Dapper Dan besides bespoke haberdashery and haute couture. Ultimately, all successful salesmen thrive because they tell the truth about the products they sell. Telling a customer that a poor performing car with a faulty transmission is better than a new car with a factory warranty will get you fired. It’s kind of like the Fed telling people that by slowing down the economy and making them poorer, they are much better off.
I remember well that day in March 2020. I was at Jake’s, gnawing on a hush puppy, when I heard the government was shutting down everyone’s business, telling them to stay home to flatten the curve. No one could believe it. Bubba Jones, a tow truck driver said this was going to ruin the economy and the economic repercussions would be long lasting. Lawyer Billy Williams said the government was going to milk this for all it’s worth and extend the mandates as long as they could. Frankie Smith, an HVAC technician said prices would sky rocket after the economy opened back up. Giggles, Jake’s long-term waitress said “have they lost their f#cking minds!”
I wonder how regular people, half lit on PBR knew how devasting shutting down the world economy would be and our wise philosopher kings at the Fed with all their resources and education did not? Not one of them sounded the alarm.
Yet, Giggles knew more than they did…….