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The other day reader Mike M. asked in our comments section:
Hi Lee - What do you think of this Powell fellow as Fed Chair? It appears from an article I read that he is fond of the TBTF bailout.
Mike, you are not the only one to ask me this question. In fact, people right here at Money Map Press have been asking me. No doubt, the entire world wants to know. CNBC talking heads talk about it. The Wall Street Journal and Bloomberg and Reuters have probably written great tomes about it.
When asked a question to which everyone wants an answer, I always give it great thought. And I always think about the Fed chair, no matter who he or she is.
I usually end up not thinking much of them, Bernanke especially. He destroyed the lives of millions of senior citizens by taking away the interest income they depended on to supplement their Social Security. I despised Bernanke for that alone, not to mention the massive money printing that benefited only the bankers and speculators. Yellen I liked better. Other Fed critics, including some who are my friends, may still skewer her. I give her credit for stopping the madness.
Now here's what I know, and what is most important for you to know about Jerome Powell. They call him Jay. Other than that, nothing. That's right, nothing.
I'm going to tell you why and what you do need to know.
We're here as investors. We're not policymakers. We're not economists. Our only concern is which direction is the stock market headed. And our concern should not be where it might be headed six months or a year or six years from now.
We need to get the current trend right. We need to stay focused purely on the question of what the current trend is, and whether there's a transition under way.
If we don't get that right, it absolutely won't matter what we know about likely future Fed policy.
Wall Street and its media handmaidens want us to take our eye off the ball. The Street only wants to stick its grubby fingers in our pockets and regularly skim just enough of our hard earned capital to stay fat and happy, but not too much that we leave their game.
So they disseminate all kinds of stories designed to take our attention away from our job, which is to preserve and grow our capital. To do that, we need only two rules. Rule No. 1 is, of course, "don't fight the Fed." It's not "don't fight the Fed" in six months or a year. It's "don't fight the Fed right now." Rule No. 2 is "the trend is your friend." Knowing the trend requires both following the Fed and a little technical analysis.
It does not include a bio of the next Fed chair.
At the Fed, People Are Irrelevant, but Policy Is Everything
Look, everybody knew before he came to the Fed that Ben Bernanke was a money printer. His high school social studies term paper on the idea that the Fed caused the Great Depression with its supposed tight money policies was famous.
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Or maybe he wrote it when he was an absentminded professor at MIT, a school famous for turning out economic "geniuses" who become policymakers. It is one of the great theological seminaries of Economism, the great polytheistic religion of the policymaker priesthood.
Bernanke also had given his famous sermon on helicopter money and printing presses in the basement, before he became Fed chair. His theological treatise and sermon are what got him appointed as high priest of the Fed.
What difference did that make? He came into the Fed and continued the super gradual tightening that had been instituted by the previous Fed chair, Saint Alan Greenspan. Wall Street and the media had anointed Greenspan a god. He was the Maestro. Greenspan had been raising the fed funds rate since 2004. He had even slowed the growth of the Fed's balance sheet a tad.
That's what Cardinal Bernanke inherited when he ascended to the papacy. He came in with the Fed tightening, and he continued to tighten. That was the church dogma of the day, and he followed it.
So what did Helicopter Ben do when he ascended to the Fed throne?
About the Author
Financial Analyst, 50-year charting expert, finance + real estate pro, and market analyst; published and edited the Wall Street Examiner since 2000.