Five years ago, before the Covid started, I cashed all my investment into dollar. Yes, you hear me right. I missed the last a few booms on equity. I did that because after I read couple of books with negative world view, the only conclusion I can draw at that time, even I didn’t really want to accept, is to hold dollar. Even today I couldn’t believe this is what we are going into.
I don’t think this is an article to say I’m a crazy person. At that time, the first thing I hate on my top list is Fed. I thought they had absolutely no idea what they were doing. Of course I were wrong and naive. For your curiosity, these days the first thing I hate is Tesla. Once again I could be wrong about it.
Job of Fed
I’m not gonna be able to tell you the job of Fed, but i can tell you that there’re so many things that can’t be controlled by Fed. The first thing is the political issue around the world, the health situation around the world, and the president of the United States. Therefore you could think of the job of Fed is limited due to the power it has. Of course they can deal with the money directly, but they can only deal with it in a global level, in economic word, it’s called macro level.
As a normal person, you really don’t want to get into the macro level of anything. Believe me, you are just not there, if you are interested, fine dig into it, but please don’t apply that knowledge to your personal life. Your life is what’s called micro-micro, or nano, if that word exists in economics. #1 Mistake any newbie made about his money is to apply what he learned from macro into micro scale.
So, Fed deals with macro most time. Please don’t crucify him if sometimes his policies just don’t apply to you. Sometimes I’m very surprised to see Fed is personal, for instance, they are willing to give everyone in US some money so that they can pass Covid smoothly. I guess when something applies to everyone, Fed has to do something about it.
Fed also has to clean up all the s*** it created, especially when it comes to something he shouldn’t do (from Textbook) at the first place. If he printed too much money, he had to find a way to shrink it a bit eventually, why? We can only afford small portion of people to be rich, not everyone. When rich becomes expensive, people could change to think there’s different way to live their life. Therefore Fed’s job is more like smoother, buffer, responder, or anything make them first watch and do something. In that sense, Fed’s job isn’t any magical, you could even think what they are doing is most time boring, although they still could surprise you by their own predications.
World economy
Fed couldn’t change the economy of the world. I don’t really think anyone in the board of Fed knows why and how to change that. It’s not their job, by watching it, they are all puzzled and surprised, and puzzled again. When you graduate from school, that’s normally how you feel about the world. They never graduated theoretically, let’s put it that way.
So who decides the economy of the world? Nobody. When you play a game, do you know who wins? Yes I do, the most powerful player wins. Yes that’s true. So who’s the most powerful players in the world? Can you name couple of them? Do you know what they’re doing everyday? Do you know what’s their next move? Er, you get the point, not too many people can keep track of them that well, not even in a macro level.
Fed can’t decide the future, they can only damper the future; won’t make it too big, and won’t make it too small either. Fed is a coward that he won’t make things out of thin air; but Fed is also brave because he has to do what he has to do from the textbook once he knows the situation. He’s old school father, let’s put it. Strong and no one can bend it except the reality.
IMHO, Fed is doing great job. Five years ago, I wish Fed can raise interest rate; everyone would think I were crazy. Yes I were, no one would act upon things that never happened yet. That’s why Fed wouldn’t raise interest rate; but now you shouldn’t crucify Fed by raising interest rate. Because he already sees everything, doesn’t he?
Summary
So who should we blame? A bit of US President, and a bit of yourself. Why president? Because he’s supposed to be creative to make US great again? Do we have that type of expectation? I don’t know. But if you do, then it’s US President.
Why a bit of yourself? Because you are supposed to vote for a president to change the world. No one can help you to do that. If you voted the wrong guy, or if the guy you voted didn’t do the thing. It’s partially or fully your own fault, isn’t it? Who else can make him the president?
So Fed isn’t the evil on your destiny. On the contrary, pay attention to what he does, since he will blow your mind with what he knows at this moment.
