All Right, Enough

With January 30th's Fed decision, and the oceans of "analysis" and financial media blathering behind it, it's time to take a hard look at what the Fed can do, and what it can't.

Personally, I'm sick of the coverage, and the carping from underperforming money managers who have no idea how to manage monetary policy. One of them in particular, who shall not be named, has yet to say one good thing about the Fed for the past 15 years no matter HOW well the economy was performing. But with a published book, a newsletter, and a booking agent, you too, can be a qualified "expert" and get some media time, and paid speaking engagements.

But rate policy, as far as the lived experience of the average person, has been reduced to practically a side show over the past couple of decades. Calamities like war and pestilence are the real problems. To quote Lenin, "There are decades where nothing happens; and there are weeks where decades happen," and the pandemic certainly proved that.

During the crisis, pricing for all kinds of consumables and basic needs went haywire, but never to the extent of the hysteria the media generated. And the chattering classes acted as if they expected the Fed to simply pirouette through this global chaos with perfect symmetry and execution.

Two words for that crew.

The fact is monetary policy is not a panacea, but since the Volcker days, the office of the Chairman of the Federal Reserve has been elevated to a Taylor Swift-like celebrity status. Compared to challenges ordinary Americans face, in terms of near intractable housing shortages, health care costs, paradigm shifts in the workplace, and these upheavals caused by "Black Swan" events, a 50 basis point cut isn't going to move the needle for the average person living an ordinary life.

But the media commentators act as if the Fed controls the economy the way a rheostat controls a ceiling fan. If life were only that simple.

And it follows a disturbing pattern for media coverage at large. History is a good teacher. Years ago, when the oil shocks of the 1970s occured, they had a dramatic effect on people's behavior. Car manufacturers couldn't sell their 8 MPG gas guzzlers and the industry had to make a massive pivot to make more fuel efficient cars. Petrolheads will remember the resulting product was awful, but I will never forget the classified ad I saw in the New York Times offering the newly released Volkswagen Rabbit Diesel being offered at twice the price of a new Cadillac.

This time, when gas prices went up after the pandemic eased and demand (and prices) surged, nothing changed. The three top selling vehicles in the U.S. were STILL full sized pick-ups which most people don't need, and the consumers simply paid the price for their own profligate decisions, as if owning one of these monstrosities was guaranteed by the Constitution. Besides the $100 a tank fill-ups they larded on themselves, the average monthly lease is now north of $600. So, they just indulge themselves and do what Americans always do:

They spend to the absolute limit of their ability, and when the business cycle turns on them, they blame everyone else but themselves and have Lester Holt lead the prayers for the aggrieved and hope for relief.

Unfortunately, reality has a way of stepping in with unforeseen events. I'm too young to remember it, but the "Eisenhower Recession" was quite brutal, and was caused partly by:

The 1957–1958 Asian flu pandemic was a global pandemic of influenza A virus subtype H2N2 that originated in Guizhou in Southern China. The number of excess deaths caused by the pandemic is estimated to be 1–4 million around the world (1957–1958 and probably beyond), making it one of the deadliest pandemics in history.

Over 100,000 Americans lost their lives during that one, and not even a "lab leak" theory to tease us with. There were other factors, of course, but unemployment spiked and housing and auto sales plummeted. To his credit, Eisenhower refused to contemplate a tax cut, because he was the last sober fiscal conservative the Republican Party was ever going to elect.

Stuff happens. It always does. But the difference today is the media can orchestrate a non-stop extravaganza of manufactured misery for the public to consume. And it convinces people things are really that bad, even when they're not. In America, it seems, no one has any personal agency and this cold, cruel world is just ruining everything for you.

Here's the President of NBC News ADMITTING in public she pushed a warped narrative of the "tyranny" of inflation. Supposedly, they actually found real people burning "expensive" gasoline, driving two hours to save two dollars for one loaf of bread. Not even Whole Foods has a price spread like that. This is what the modern journalist calls "reportage."

And this is from the "legitimate" press, not Alex Jones. The fact is, the media is now shaping perceptions in ways it couldn't dream of. Traditionally, genuine journalism did its best to avoid bias, although a complete lack of it is impossible to do. But at least it made the attempt. Today, selling the story is what it's about, and with the public having the attention span of a mayfly, they simply nod in assent.

So whether it's scapegoating Chair Powell or finding some losers looking for a cheap loaf of bread while air travel sets records, the endless carping and complaining is what gets the clicks and eyeballs and it affects the nation's perceptions to such an outsized degree, reality barely matters. After all, if things are tolerable and the economy is strong, what DO you report on?

January 31, 2025