More resignations at the US Fed because of stock market trading controversies
I have said time and again that the US Fed and most central banks in developed markets have become all talk and no show. In fact, most of their policies seem to be at saving equity markets over the real economy - as if they want to save those that are asset rich as opposed to economically weak i.e. members of the US Fed, politicians, and those that sponsor politicians and donate to their parties.
The day before yesterday, US Fed's vice chair, Richard Clarida, tendered in his resignation. He was forced to do this because he conducted certain financial transactions at the beginning of the COVID-19 pandemic, which are being touted as controversial. Basically, he sold equity and equity benchmarks when the pandemic started and bought them right before the US Fed's announcement to support markets. These are not controversial transactions but this is simple unethical insider trading.
These trades are now under review by an inspector general, as the officials were in a position to possibly benefit from insider knowledge of economic conditions. Source
The result of the above investigation will probably be lost in time.
He is not a lone wolf. Earlier Dallas Fed chair, Robert Kaplan, and Boston Fed chair, Eric Rosengren, were also caught in similar "controversies". Kaplan bought and sold equities worth $27 million notional. Rosengren did some transactions in real-estate trusts.
Problem is that this is the information that has come out. I am sure there are many others who are privy to private information and have violated such norms or are exempt from such disclosures because of the office they hold. When those in charge of making policies are asset holders, then they will design policies to lift up asset prices.
The US Fed recently changes its policy rhetoric. Already, Jerome Powell can be heard softening his stance. He has said that it is time for the Fed to move to tame inflation but it will be a long road ahead. The ongoing correction seems to be enough for him. The long road ahead means that policy decisions will be slow and such that they do not spook equity market participants or bring volatility in the system. Risk assets ended up in the green yesterday following his comments and not because Fed will tame inflation.
It is appalling to see what Fed members are up to. Buying and selling shares on insider information with little to no consequences. This is why policymakers cannot be taken seriously. It is for this reason that a decentralized store of value that does not require third-party counterparty trust is needed and is seeing increasing adoption as time goes by. It is why Bitcoin and the DeFi innovation are revolutionary.
Unfortunately, the majority of people are not interested in being financially savvy. Rigged policies go unnoticed as long as a cheque from the government is received - doesn't matter if it is enough or sustainable. Thank god, there is an independent system that is evolving outside the control of central banks. If you still do not get what gives Bitcoin intrinsic value, then I should state that it is the same system that gives fiat money intrinsic value. It's just a matter of whether you trust or distrust the current system.
Posted Using LeoFinance Beta
