The "Fed Put" is at whatever market level causes the future jobs at Citadel, Pimco and Blackrock to dry up.

This article probably marks a short-term bottom.

“The Fed creates ever-larger asset bubbles that then crash, and then they flood their future employers with cash, and say "no one saw that coming."“

- some nut on Twitter

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Someone asked me yesterday why I do this. Clearly it’s for the money. Wait.

A longer answer is that I’ve been fortunate enough to be following the markets and the Fed very closely since the 1990’s. I was particularly amazed that there was this group of extremely powerful wizards known as “the Fed” - a group of cloistered high priests whose only motive was altruism (at least according to the media, 99% of economists, and about 90% of market analysts). Most Americans don’t know these high priests even exist, and certainly only a few nuts questioned their omniscience.

Yet the reality I saw didn’t match the narrative, time and time again, and the worse the Fed seemed to do, the more credibility and power they received in the mainstream. It was aggravating. I felt like the kid in the “The Emperor’s New Clothes,” or DeNiro in Casino: Don’t you see the scam?

The reason I think almost no one understands the existential threat the Fed poses is that first of all, most Americans own no stocks, and are too busy trying to survive to learn what’s been going on. Most Americans don’t even know who the head of the Fed is, or how corrupt the institution is, and that’s just fine for the 10% or so of Americans who’ve been doing so well this past decade, and especially the 0.001% who are now wealthy beyond all human comprehension, largely due to our latest Fed-induced asset-bubble. They know who the Fed Chairman is, and they love him (at least until lately). Meanwhile I’ve said since 2008 that half of America is in a depression.

I could go on for hours (as you know), so instead of itemizing all the issues (again), I’ll just summarize: the Fed is very bad for most of us, certainly for our children.

Despite this fact, there’s never any accountability nor apology. It’s surreal. Ultimately that’s on our execrable Congress, which created this Frankenstein monster.

I had thousands of examples on Twitter of our corrupt private bank cartel (and the military-industrial war machine it is so intricately tied to.) Now that’s all (for all intents and purposes) gone.

I’ve tried for a decade to show you the scam, with facts, and links, and humor. I really hate what’s been happening to America, especially to the bottom 90%, really starting in the 1970’s when an anchorless currency empowered all the financial predators we see today. I think Fed policies this century, along with the horrific Bush and Obama Presidencies, led directly to Trump, and are a source of a good part of our current summer of discontent.

In July 2021 I wrote: “When I make French Revolution jokes, it's because I'm terrified of what's going on, so I joke about it. I don't want guillotines. I've been hoping for 8 years here to avoid that. I just wanted our kleptocrats to tone it down a notch, but no.”

This is from The Storm Before the Storm: The Beginning of the End of the Roman Republic, by Mike Duncan:

Further investigation into this period reveals an era full of historical echoes that will sound eerily familiar to the modern reader. The final victory over Carthage in the Punic Wars led to rising economic inequality, dislocation of traditional ways of life, increasing political polarization, the breakdown of unspoken rules of political conduct, the privatization of the military, rampant corruption, endemic social and ethnic prejudice, battles over access to citizenship and voting rights, ongoing military quagmires, the introduction of violence as a political tool, and a set of elites so obsessed with their own privileges that they refused to reform the system in time to save it.

It’s these elites I’ve been bashing, and trying to educate people about, for decades now. I think many more people are aware of the scam since I started ranting, and that’s somewhat comforting. I hope we can do something to get off this path before we end up like Rome.

For starters, stop voting for people who support the Federal Reserve.

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“…asset bubbles create huge increases in income for top earners, particularly in the finance sector, due to the relentless expansion of credit brought about by prevailing low rates.” - Marshall Auerback, 2019

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• “…the Fed cannot reliably identify bubbles in asset prices.” - Citadel Ben Bernanke, 2002

• “It is ludicrous to believe that asset bubbles can only be recognized in hindsight.” - Michael Burry, 2005

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Jeremy Grantham, The Top Of The Cycle, August 2021

…Bernanke completely didn’t see the housing bubble and the risk it posed. He said the US housing market merely reflects the strong US economy. The US housing market has never declined. It never had declined because it had never had a bubble before. Every time there’s been a bubble there, it has always declined. Hyman Minsky’s lips, you create a situation like that it will eventually blow up its own weight, burst of its own weight.

Anyway, he was convinced it wouldn’t collapse. And of course, it did. And the housing market went all the way back to trend and below, which was a dreadful hit. And it created so much chaos. It carried the stock market down with it, again, 50% on the S&P almost exactly to the first decimal point. These are not small declines, and yet they occurred in the face of passionate defenders and promoters of moral hazard and I’ll come to your rescue and we’ll make money cheap as it takes. And that took us through Yellen and then into Powell, the same story.

They all talk a wonderful game about how they’ll be the friend of the asset class, asset class pricing, friend of the stock market. And yet, it didn’t stop two of the greatest wipeouts in American history.

The most impressive thing here is not that they do the same thing over and over again as if they have somehow no memory. It’s the faith the financial community has in them, despite the fact that they have been let down badly twice. These were not insignificant setbacks. The tech crash was brutal. Amazon down 92, every growth tech stock was down 70 or so it seemed.

The housing bust was merciless. The stock market decline was really painful. And yet, it’s as if it never happened. Oh, Powell says this, Powell says that the FED has money, the FED is going to be our friend. Hey, Greenspan was our friend, Bernanke was our friend and we got croaked, guys, what is the matter with you?

The Federal Reserve simply does not understand the risks of asset price bubbles and asset price collapses. It is clear from the data they don’t get it. Greenspan could never make up his mind whether the market was overpriced, irrational expectations, or whether, in fact, it was fine.

Yellen couldn’t. Bernanke couldn’t see a housing bubble that was a three-sigma 100-year event, where were his statisticians? The answer is the Federal Reserve statisticians do not do asset bubbles. They are, in that respect, utterly clueless. And we apparently never see that. We are willing to look through the crash of 2000, the housing crash, a really dangerous affair. They didn’t do their duty. They didn’t hit it off. They didn’t raise the limits for mortgages. They didn’t warn anybody. They allowed it to happen. And yes, they were pretty good in the decline. They were pretty good at applying bandages and stimulus and support for the wounded.

But they sure as hell should not have allowed that housing bubble to occur. They don’t get it. They don’t see the risks and they don’t see them now. And so this time, we don’t just have a housing bubble. We have a housing bubble, a stock market bubble, a commodity bubble, and a bubble, an interest rate bubble. This is going to be the biggest write-down. The next time we’re pessimistic, we have more potential to markdown asset prices than we have ever had in history anyway.

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All four chairmen post-Volcker have underestimated the potential economic damage from inflated asset prices, particularly housing, deflating rapidly. The role of higher asset prices on increasing inequality also hasn’t been considered. Asset bubbles are extremely dangerous…In short, the Fed since Volcker has been pretty clueless and remains so. What has been more remarkable, though, is the persistent confidence shown toward all of these four Fed bosses despite the demonstrable ineptness in dealing with asset bubbles.

- Grantham

Axiom number one. Inflation depends on the growth of money.

Axiom number two. Asset price bubbles depend on the growth of credit.

- Charles P. Kindleberger and Robert Z. Aliber, Manias, Panics and Crashes (1978)

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The big problem here is that high bond prices and incredibly low yields provide dangerous incentives. Investors search for more yield regardless of risk, and everyone — households, companies and governments — borrows to excess while debt servicing costs are minimal. The result is an explosive growth in debt.

- John Plender

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• “QE has perverted investor expectations about what the permanent cost of capital is." - Peter Cecchini

• "...when you look at the wealth disparity today, which by the way, in my opinion, the biggest accelerant of has been QE, it's not even debatable..." - Stan Druckenmiller on Realvision, 2019

• “QE has been a massive deceit and a huge factor in driving inequality.” - Nomi Prins

• "QE was socialism for the 1%." - Kiril Sokoloff

• “Twenty-first central bankers are many things. What they are not is original. QE, financial repression and other post-2007 radical monetary innovations got a fair trial in France exactly 300 years ago. In the resulting spectacular boom and bust is a cautionary story for our time.” - Edward Chancellor

• “I grew up in France, so I had a good dose of Marx in my education. The first thing Marx teaches you is that revolutions are typically the result of inflation.” - Louis-Vincent Gave

• QE "1, 2 and 3 really did not lift the economy. The academic studies show that. The Fed won't accept that, but to me, the nasty aspect of the quantitative easing is that as it came in, it exacerbated the income and wealth divides." - Lacy Hunt

• "QE made cheap and accessible the financing that prolonged the lives of companies that would otherwise have met their maker in some Delaware courtroom." - Jim Grant

• “...monetary tightening strongly decreases the share of national income held by the top one percent and vice versa for a monetary expansion, irrespective of the position of the economy..." - Mehdi El Herradi & Aurélien Leroy

• "For all that veneer of credibility…QE has simply been an exercise in monetary debasement." - Julian Brigden on RealVision, 2017

• "QE's aim is -- this they will never say, but it is targeting explicitly, implicitly, debasement -- so lower currencies." - Etienne de Marsac, Former Head of Proprietary Investments at the European Investment Bank, Realvision 2020

• "A lot of what the Fed now has to do, remember, is going to go to these nameless hedge funds. Nobody wants to name them, because nobody wants to know that quantitative easing is there to bail out some hedge funds." - Raoul Pal, March 16, 2020

• "It's always been about bailing out the stock market. The first Covid bailout was really buying high-yield bonds. The first thing the government did was give money to Blackrock to go buy ETF's. A lot of that ETF's went into high-yield..Why are we still doing $120B a month in QE?" - Guy Adami, March 2021

• "the Fed stepped in, almost instantaneously, and initiated a $400 billion bailout. This bailout...benefitted a small group of hedge funds that had [used the repo market] as a vehicle to make risky bets. The Fed saved them from the consequences of those bets.” -Christopher Leonard, talking about September 2019

Why are all the historians criticizing central banks, and the economists are all behind it? Because the historians know, and they’ve seen this time and again, you end up having a situation where there’s suppression of volatility, a funneling of money into asset prices, there’s a financial crisis, there’s a massive wealth disparity that leads sometimes to a democratic revolution that results in a new regime that causes tremendous issues.

- Chris Cole

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Forget the official Fed narrative. Look at the results.