K-12 Tax & Spending Climate: Federal Reserve Policies

David Haggith:

e Fed is financing the government at this level to save the nation from the economic devastation caused by the government-mandated COVID closures of 2020, but it is doing it at the cost of crushing monetary policy. No one in the main financial or political media is calling the Fed out on this outright debt financing, and no one is likely to care because everyone quietly realizes the entire economy and all markets would crumple into the dust if the Fed stopped doing what it is doing.

What they don’t allow themselves to realize is that this situation predictably developed because the Fed has been creating total economic dependence on itself for the last decade. We are now witnessing the terminus of years of bad Fed policy that piled up as the Fed tried to centrally control the US economy under its own superior intelligence as to what is best for markets. (At a level that has made Chinese central planning look like the “B” team.)

Most financial writers and political writers wore blinders to block out that reality throughout the long period over which the Fed tried to create a recovery from the Great Recession. I have always argued they were creating a permanently Fed-dependent recovery that could never withstand the Fed’s withdrawal of stimulus money and never withstand the next major financial crisis.