Over the last few years I have been talking about how Federal Reserve officials misdirect investors, businesses and Americans about the economy, the financial markets, and their own intentions. This is somewhat by design, since the Federal Reserve uses artificially means to benefit the financial industry while disrupting the free market. In the midst of what is called a “market economy” in America, the cost of money itself is not allowed to be set by the markets. The Federal Reserve directly controls the cost of money, by manipulation of interest rates, the money supply and inflation, and to a lesser extent, the financial markets. In this latest economic cycle, the Fed has used its control over interest rates, and its words, to control Wall Street and buyers of U.S. Treasury debt, with financial bubbles and misallocated resources being unfortunate byproducts.
David A. Pace, CFA
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