As you know, the Fed dictates the direction of the markets…but there’s actually a way to predict the Fed’s actions ahead of time. And this indicator is available to us every day in real time.
There’s an economic indicator (actually, indicators) that gives a much clearer picture of the U.S. economy than the official and unofficial economic statistics that are reported in the mainstream media. It’s hard cold data of what actually is. It’s not collected by survey, not constructed from tiny samples and then extrapolated a millionfold, and not manipulated by statisticians and economists. It isn’t misreported by the media because they never report it.
The U.S. Treasury publishes this data every day, one day after those taxes are collected. When it comes to the U.S. economy, it doesn’t get any more real time than that.
It is U.S. government tax collections, and right now it’s telling an important story that we all need to pay attention to.
Many of my long-term bearish friends believe that the Fed’s motives are nefarious. To them QE (Quantitative Easing) and ZIRP were about cronyism — designed specifically and cravenly only to bail out failing banks during the financial crisis, and nothing more. The Fed was just greasing the skids for the bankers to skim ever more profit from the economy.
Sure, there probably is an element of that. There’s a lot of cronyism between the Fed and its member banks. The door between the Fed and Wall Street is a revolving door. Even those Fed members who were primarily academics, have had their reward stints as high level officers of Wall Street banks. Yes, it’s a cesspool.
But I’m less certain that the Fed’s aim was that perverse. Certainly the Fed was panicked, and that was one of its motives. But the Fed continued QE and ZIRP long after the panic had subsided. So why did they create such massive dislocations?
I believe the answer is simple. The Fed did what it did because Fed policy makers are nuts.