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Turns Out the Federal Reserve is Just a Bunch of Economic Academic Lifers

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@scaredycatguide
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Probably would have felt better not knowing this information as I don't see how anything but a distorted unrealistic view can be in play.

Below is a list of most FED Bank presidents. There is a theme that honestly doesn't sit well with me.

Experience of FED Bank Presidents....

All of these people people on this list of FED lifers. They have no other experience. No real world economic or capitalism experience.

Never ran a business, never acted as a CEO. Have done nothing but life in the world of economic academics.

No real world experience....uhm, "Houston we have a problem."

Linear thinking in a non-linear world.

The problem with academic only thinking is it's usually rather linear. This is why the FED thinks they can navigate the economy with interest rates and quantitative easing with some type of prescion.

Decades of experience show us this is not the reality though.

Money and Behavior is not Linear.

The relationship between the price of money and real-world behavior is non-linear. At some point it becomes like pushing on a string.

The FED cutting rates from 4% to 0% didn't spur real-world inflationary behaviors, rather it spurred market financialization behaviors.

In case you do not know, financialization is profit margin growth without labor productivity growth.

Think stock buy backs and acquisitions of smaller competitors creating monopolies of scale.

The above graph is labor productivity since the cut rates print money party began over a decade ago. Outside of the covid spike, basically it dropped and stayed relatively flat lined.

But I digress....

The FED raising rates (finally) will not have the impact on inflation they believe it will, just like it did not have the impact they expected with their near zero interest policies.

It's been a fun experiment, but at what point does the FED lose all credibility?

Or has it already?

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