Grand Lake Stream | The conversations over the Labor Day weekend at Leen’s Lodge ranged from negative interest rates to the efficacy of a bubble gum colored wacky worm vs live bait in late season bass fishing. We’ve mostly decided that a large mouth bass raised in Maine tastes about as good as small mouth bass when flash fried over an open fire.
Confirming that quality trumps quantity, we proved empirically that a single issue of Grant’s Interest Rate Observer, supplemented with a few pine cones, is a superior fire starting accelerant than a whole section of The Financial Timesor The Wall Street Journal.
One major point of consensus view is that the global investment community needs to stop asking central banks to address issues for which they are neither suited professionally or politically. The spectacle of former New York Fed President William Dudley exhorting his former colleagues on the Federal Open Market Committee to resist President Trump was pathetic and sad, yet another faux pas for the Fed of New York this year.
The Dudley rant illustrates the collective madness that has consumed many observers over the past decade. In truth, the crisis of 2008 still has not been resolved. Dudley wrote:
“There’s even an argument that the election itself falls within the Fed’s purview. After all, Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives.”
Really? Dudley displays the dangerous “I am Superman” complex we wrote about in 2010, a virus that has infected the Federal Reserve System over the past two decades. Mission creep does not begin to describe the pathology of the madness that makes Fed officials think themselves omniscient. We challenge Dudley to point to a section of the Federal Reserve Act than authorizes the political activity he suggests.
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