{"id":1799652,"date":"2023-01-09T08:35:34","date_gmt":"2023-01-09T13:35:34","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1799652"},"modified":"2023-01-09T08:36:09","modified_gmt":"2023-01-09T13:36:09","slug":"is-the-fed-trying-to-wean-markets-off-monetary-policy","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/is-the-fed-trying-to-wean-markets-off-monetary-policy\/","title":{"rendered":"Is The Fed Trying To Wean Markets Off Monetary Policy?"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fis-the-fed-trying-to-wean-markets-off-monetary-policy%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1799652&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47-->\n<p><em>Commentary<\/em><\/p>\n<p>Is The Fed Trying to get the markets off <a href=\"https:\/\/www.theepochtimes.com\/t-monetary-policy\">monetary policy<\/a>? Such An interesting idea from the past British Diplomat\u00a0Alastair Crooke Through the Strategic Culture Foundation, <a href=\"https:\/\/strategic-culture.org\/news\/2022\/10\/31\/they-rule-over-dysfunctional-ruin-but-they-rule\/\">to wit<\/a>:<\/p>\n<p>\u201cThe Fed however, may be attempting to implement a contrarian, controlled demolition of the U.S. bubble-economy through interest rate increases. The rate rises will not slay the inflation \u2018dragon\u2019 (they would need to be much higher to do that). The purpose is to break a generalised \u2018dependency habit\u2019 on free money.\u201d<\/p>\n<p>That This powerful statement, if it is true, will have a profound impact on the economy and financial markets in the next ten years. Such It is crucial to remember the effects of repeated fiscal and monetary interventions on your finances. <a href=\"https:\/\/realinvestmentadvice.com\/long-term-returns-are-unsustainable\/\">financial market returns<\/a> The previous decade.<\/p>\n<p>The Below is the chart showing annual inflation adjusted total returns, including dividends. It was created in 1928. The total return data was taken from Aswath DamodaranPlease see: Stern School Of Business professor at New York University. The The chart below shows how the market has returned 8.48% after inflation from 1928 through 2021. HoweverNotice that returns increased by four percentage points on average for different periods after 2008&#8217;s financial crisis.<\/p>\n<figure id=\"attachment_4968778\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/01\/07\/image1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy wp-image-4968778\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image1-600x330-1.png\" alt=\"image1\" width=\"640\" height=\"351\"   style=\"display:none\"><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4968778\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image1-600x330-1.png\" alt=\"image1\" width=\"640\" height=\"351\" \/><\/noscript><\/figcaption><\/a> (SourceRealInvestmentAdvice.com)<\/figure>\n<p>We These outsized returns can be directly tracked back to the Fed\u2019s repeated monetary and the government\u2019s fiscal policy interventions during that period. Following Financial crisis: <a href=\"https:\/\/www.theepochtimes.com\/t-federal-reserve\">Federal Reserve<\/a> Every time that the market was in danger or stumbled, we intervened to provide monetary assistance \u201cwealth effect.\u201d<\/p>\n<figure id=\"attachment_4968779\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/01\/07\/image-2.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy wp-image-4968779\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-2-600x348-1.jpg\" alt=\"image-2\" width=\"640\" height=\"371\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4968779\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-2-600x348-1.jpg\" alt=\"image-2\" width=\"640\" height=\"371\" \/><\/noscript><\/figcaption><\/a> (Source: St. Louis Federal Reserve, RefinitivRealInvestmentAdvice.com)<\/figure>\n<p>While Many people want to suggest this. Federal Reserve\u2019s monetary interventions do not affect financial markets, the correlation between the two is extremely high.<\/p>\n<figure id=\"attachment_4968780\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/01\/07\/image-3.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy wp-image-4968780\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-3-600x348-1.jpg\" alt=\"image-3\" width=\"640\" height=\"371\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4968780\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-3-600x348-1.jpg\" alt=\"image-3\" width=\"640\" height=\"371\" \/><\/noscript><\/figcaption><\/a> (Source: St. Louis Federal Reserve, RefinitivRealInvestmentAdvice.com)<\/figure>\n<p>HoweverThe result of over a decade&#8217;s unrestrained monetary experiments has led to an enormous wealth gap in America, which is now front and centre of the political landscape.<\/p>\n<figure id=\"attachment_4968781\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/01\/07\/image-4.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy wp-image-4968781\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-4-600x305-1.jpg\" alt=\"image-4\" width=\"640\" height=\"325\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4968781\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-4-600x305-1.jpg\" alt=\"image-4\" width=\"640\" height=\"325\" \/><\/noscript><\/figcaption><\/a> (Source: St. Louis Federal Reserve, RefinitivRealInvestmentAdvice.com)<\/figure>\n<p>It isn\u2019t just the massive expansion in household net worth since the financial crisis that is troublesome. The Problem is, almost 70% of the household&#8217;s total net worth is concentrated within the top 10% of income earners.<\/p>\n<p><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/01\/07\/image-5.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy aligncenter wp-image-4968782\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-5-600x325-1.jpg\" alt=\"Epoch Times Photo\" width=\"640\" height=\"347\" \/><\/a><\/p>\n<p><noscript><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-4968782\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-5-600x325-1.jpg\" alt=\"Epoch Times Photo\" width=\"640\" height=\"347\" \/><\/noscript><\/p>\n<p>While It was unlikely that it would be the Fed\u2019s intention to cause such a massive redistribution of wealth, it was the goal of its grand monetary experiment.<\/p>\n<h2>Pavlov\u2019s Great Experiment<\/h2>\n<p>Classical conditioning\u00a0(also known as\u00a0Pavlovian\u00a0or\u00a0respondent conditioning) refers to a learning procedure in which a potent stimulus (e.g., food) is paired with a previously neutral stimulus (e.g., a bell).\u00a0Pavlov He discovered that dogs salivated in anticipation of the powerful stimulus when he gave it to them. This The psychological learning process leads to the learning process \u201cpairing\u201d The stimuli.<\/p>\n<p>This Over the past decade, investors have been subject to conditioning.<\/p>\n<p>In 2010, then-Fed Chairman Ben Bernanke\u00a0Introduced the \u201cneutral stimulus\u201d To the financial markets by adding \u201cthird mandate\u201d To the Fed\u2019s responsibilities\u2014the creation of the \u201cwealth effect.\u201d<\/p>\n<p>Bernanke The author wrote about the \u201cwealth effect\u201d  Washington Post Op-Ed  November, 2010:<\/p>\n<p>\u201cThis approach eased financial conditions in the past and, so far, looks to be effective again.\u00a0Stock prices rose, and long-term interest rates fell when investors began to anticipate this additional action.\u00a0Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment.\u00a0And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.\u201d<\/p>\n<p>ImportantlyFor conditioning for work, see the \u201cneutral stimulus,\u201d When introduced, the must be observed \u201cpotent stimulus\u201d For the \u201cpairing\u201d Completed\u00a0For Investors, such as Fed Introduced each round \u201cQuantitative Easing,\u201d The \u201cneutral stimulus,\u201d The <a href=\"https:\/\/www.theepochtimes.com\/t-stock-market\">stock market<\/a> As the \u201cpotent stimulus\u201d rose.<\/p>\n<p>Twelve Years and more than 400% gains later, \u201cpairing\u201d It was completed. Such Investors now switch from one economic report to another. Fed In anticipation of the, we will be meeting up at the next \u201cringing of the bell.\u201d<\/p>\n<p>The As mentioned above, the problem is that, despite massive growth of the Fed\u2019s balance sheet and the surge in asset prices, there was relatively little translation into broader economic prosperity.<\/p>\n<p>The Problem is \u201ctransmission system\u201d After the financial crisis, a lot of monetary policies collapsed.<\/p>\n<p>Instead Although liquidity was moving through the system it was held in reserve by institutions and ultra-wealthy who did not want to be tapped. \u201cinvestible wealth.\u201d However, those programs failed to boost the\u00a0bottom 90 percent of Americans living paycheck-to-paycheck.<\/p>\n<p>The The chart below shows that the lack of liquidity has not translated into economic growth.\u00a0While Since the 2007 peak, the stock market has experienced a more than 180% return. That is more than 6x real GDP growth and 2x corporate revenue growth. I have included SALES growth below because it isn&#8217;t as susceptible to manipulation.<\/p>\n<figure id=\"attachment_4968783\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/01\/07\/image-6.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy wp-image-4968783\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-6-600x334-1.jpg\" alt=\"image-6\" width=\"640\" height=\"356\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4968783\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-6-600x334-1.jpg\" alt=\"image-6\" width=\"640\" height=\"356\" \/><\/noscript><\/figcaption><\/a> (Source: St. Louis Federal Reserve, RefinitivRealInvestmentAdvice.com)<\/figure>\n<p>Since Asset prices must reflect growth in economic and revenue, deviations from this are indicative of a larger problem. Of The problem is when they attempt to reverse it.<\/p>\n<h2>The Great Unwinding<\/h2>\n<p>The Below is a summary of the amount. Fed\u2019s current problem.<\/p>\n<figure id=\"attachment_4968784\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2023\/01\/07\/image-7.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy wp-image-4968784\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-7-600x326-1.jpg\" alt=\"image-7\" width=\"640\" height=\"348\" \/><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4968784\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2023\/01\/image-7-600x326-1.jpg\" alt=\"image-7\" width=\"640\" height=\"348\" \/><\/noscript><\/figcaption><\/a> (Source: St. Louis Federal Reserve, RefinitivRealInvestmentAdvice.com)<\/figure>\n<p>From Resolving to bail out Bear Stearns HAMP, HARP and TARP are some of the other options. Governmental Along with zero interest rate and an enormous expansion of the capital, bailouts were also offered. Fed\u2019s balance sheetIt is there was roughly $10 of monetary interventions for each $1 of economic growth.<\/p>\n<p>Now, the Federal Reserve It is necessary to figure out how wean the markets from \u201clife support\u201d To return to organic development. The As noted above, the consequences of withdrawing support must be apparent Crooke:<\/p>\n<p>\u201cPerhaps The Fed You can overcome the psychological dependency in a short time. However, this is a daunting task. As It was put by a market strategist: \u2018The new operating environment is entirely foreign to any investor alive today. So, we must un-anchor ourselves from a past that is \u2018no longer\u2019\u2014and proceed with open minds.\u2019<\/p>\n<p>\u201cThis period of zero rates, zero inflation, and QE was a historical anomaly\u2014utterly extraordinary. And it is ending (for better or worse).\u201d<\/p>\n<p>LogicallyThe end of Pavlov\u2019s great \u201cmonetary experiment\u201d It can&#8217;t end for the best. Once The market is restricted from receiving paired stimuli. Forward returns are required to reflect the fundamental math of economic growth plus inflation, dividends, and other factors. Such Was the fundamental math of returns between 1900 and 2008?<\/p>\n<p>In A world in which the Fed We want 2 percent inflation. Economic growth should equal 2 percent. Dividends can be assumed to remain at 2.5% That math is simple: 2% GDP + 2% dividend \u2013 2% inflation = 4% annualized returns.<\/p>\n<p>Such is a far cry below the 12\u00a0percent returns generated over the last 12 years. But Such is the outcome of taking the market out of the years-long monetary madness.<\/p>\n<p>Of There is also a positive side to all of this.<\/p>\n<p>\u201cIf Jay Powell breaks the Fed put and takes away the unfair ability of private capital to rape and pillage the system, he will have finally addressed income inequality in America,\u201d\u00a0Danielle DiMartino BoothChief strategist and CEO of research company Quill Intelligence, <a href=\"https:\/\/twitter.com\/DiMartinoBooth\/status\/1602412372576112662\">said<\/a> On Twitter Dec. 8.<\/p>\n<p>The bottom line is that fixing the problem won\u2019t be pain-free. Of Of course, it is impossible to break an addiction to any substance. The hope is that the withdrawal doesn\u2019t kill the patient.<\/p>\n<p><i>Views These opinions are solely those of the author. They do not necessarily represent the views or policies of The Epoch Times.<\/i><\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-lance-roberts\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/09\/WEB_LanceRoberts.jpg\" alt=\"Lance Roberts\" \/><\/a>\n\t\t\t\t\t<\/div>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Commentary Is The Fed Trying to get the markets off monetary policy? Such An interesting idea from the past British Diplomat\u00a0Alastair Crooke Through the Strategic Culture Foundation, to wit: \u201cThe Fed however, may be attempting to implement a contrarian, controlled demolition of the U.S. bubble-economy through interest rate increases. The rate rises will not slay &hellip;<\/p>\n","protected":false},"author":1,"featured_media":1799655,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[5458,7498,10752,14009,4326,3819,14008],"class_list":["post-1799652","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report","tag-bongino","tag-fed","tag-markets","tag-monetary","tag-policy","tag-report","tag-wean"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1799652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1799652"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1799652\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1799655"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1799652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1799652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1799652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}