Why RFK Must Monkey-Hammer The Fed, Part 1

Don’t expect the Uniparty to do a single thing about the nation’s #1 problem. We are referring to Jerome Powell and his rogue band of money printers domiciled in the Eccles Building.

After all, the Uniparty careerists know where their bread is buttered. Wall Street pays a big chunk of the GOP’s campaign bills, even as it feeds these allegedly conservative legislators a line of bull to the effect that today’s soaring financial asset prices represent the free market at work. But at 25X peak pre-recession earnings, what’s actually moving the stock indices is Wall Street gamblers braying for a new round of Fed rate cuts.

Likewise, Wall Street feeds the Dem war chest nearly as fulsomely. Yet these alleged champions of the common man feel no shame whatsoever because they are equipped with opaque beer googles when it comes to the Keynesian model underlying present day monetary policy. Namely, they comfort themselves with the notion that all this cheap money and Wall Street coddling is necessary to keep the main street economy on the straight and narrow, thereby protecting jobs and worker incomes from the cyclical infirmities of unmanaged capitalism.

Well, no. Not at all. The Fed’s massive day-to-day operation check-by-jowl with the traders and gamblers down in the canyons of Wall Street actually impairs capital formation, siphoning economic savings into rent-seeking financial engineering and wagering schemes. It also causes middle class wages, jobs and living standards to be lost to inflation, off-shoring and shrinking levels of productive investment.

Thus, today’s stock market at 4743 on the S&P 500 is a phony artifact of central bank monetary inflation, not sustainable valuations of national output and corporate earnings. By the same token, the main street economy is worse for the wear, not better, owing to the Fed’s endless fiddling with interest rates and massive bond purchases. This is all done under the pretext that the Fed’s purportedly gifted central bankers are busy guiding the main street economy toward full employment and rising prosperity in a manner that could not be attained by market capitalism on its own steam.

But those claims don’t wash because there is utterly no proof in the pudding. The proximate point of departure for today’s regime of radical money-printing was the dotcom crash in April 2000. So just scroll forward 23 years from there and compare the macro-economic growth performance with results going back to the end of the Korean War in July 1953.

Per Annum Growth of Real Final Sales Of Domestic Product:

• 1953-2000: 3.4%.

• 2001-2023: 1.9%.

In fact, based on an even more fundamental metric of prosperity—real GDP per capita—the slowdown has been nearly as severe. That is to say, aggregate growth since the Fed went into money-printing hyper-drive in 2001 has fallen to barely one-half of its former level, while per capita prosperity gains have been less than three-fifths of their pre-2000 rate.

Per Annum Growth, Real GDP Per Capita:

• 1953-2000: 2.23%.

• 2001-2023: 1.32%.