Yesterday’s article caused quite a stir.
If you missed it, my main point was this: the U.S. is now an emerging market. And it’s getting downright embarrassing.
Last week our Secretary of the Treasury, Janet Yellen, arguably the most important financial figure in our country, and the person in charge of managing the U.S. dollar/ financial system, groveled in front of China’s Vice Premiere He Lifeng during her visit to China
Ms. Yellen bowed repeatedly to the Vice Premiere, groveling much as an emerging market financial official would kowtow to his or her counterpart from a more developed, superior nation upon which the former’s nation relied for aid/ support/ assistance.
See for yourself. And mind you, this is one of NUMEROUS bows.
I wish this was the worst thing about the current state of incompetence for financial/ economic leaders in the U.S., but unfortunately, it’s not.
No, far worse is the fact that our central bank, the Federal Reserve, or the Fed for short, has become a political entity, as is often the case in emerging markets/ banana republics.
Let me explain.
The Fed, as per its Dual Mandate, is meant to focus on just two things: inflation and employment.
That’s the law. And for most of the last 100+ years, the Fed did focus on these issues above anything else.
No longer.
The Powell Fed is a den of corruption, incompetence, and political activism. In the last few years we’ve witnessed:
1) Scandals in which senior Fed officials were caught trading around Fed announcements. This is insider trading on a banana republic level!
2) The Fed ignoring literally HUNDREDS of signals that inflation was out of control… while still printing over $1 trillion per year and paying billions of dollars to banks.
3) The creation of the worst inflationary storm in 40+ years, all due to Fed incompetence (how did the Fed’s 400+ Economics PhDs and 150 research associates miss that inflation had arrived in 2020-2022!?!)
4) Fed Presidents pushing social justice issues openly in speeches. It’s one thing for them to discuss these things in private. It’s something else entirely for them to push for policies to address climate change, social justice, and other item as FED OFFICIALS.
5) The Fed testing the banking system for “Climate Change Risks.” Mind you, this is the same Fed that didn’t see the regional banking crisis coming, resulting in several of the largest bank failures in history.
All of the above would be downright hilarious, if the damage they inflicted on ordinary Americans wasn’t so devastating.
Let me be blunt here…
Few if any of us got rich during the pandemic. Multiple Fed officials did by trading on insider information. By the way, this continues today, with at least one Fed President caught actively trading during Fed “black out” periods when it’s illegal to do so. He wasn’t fired or forced to resign either.
Similarly, inflation has taken a heavy toll on Americans. And yet, NONE of the Fed officials who ignored the countless signals that inflation was appearing in 2020-2022 have been fired. And why would they? These are politically connected academics who haven’t worked in the private sector in years, if ever!
Again, the U.S. is an emerging market. All the signs are there: abject corruption, incompetence, politicizing everything, etc. The U.S. that existed from the 1940s until the mid-’00s is gone forever. And most of us are now on our own to navigate this new environment.
The only good thing that will come from this is that if you know how to invest in emerging market regimes, you can stand to make a fortune in the coming years.
Indeed, this kind of tectonic shift represents a “once in a lifetime” opportunity. Some investments are going to produce fortunes. Others will lose money for years… if not decades. And those investors who are positioned correctly for this will thrive while others struggle.
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