Trump needn’t have wheedled the Fed about juicing the money supply, since the banksters, ever eager to ride to the rescue — of themselves — would have done it anyway. The central bank wizards and alchemists have once again begun to “manage” our “expectations” with all the subtlety of a carnival barker touting the Big Six wheel. Their loyal spinmeisters at The Wall Street Journal gave this latest feint toward QE a boost Thursday with the headline Fed Begins Debate on Whether to Cut Rate as Soon as June. Debate, my ass. To merely hint of a rate cut is to commit to one irrevocably, since anything less would — heaven forbid! — disappoint investors.
The policy debate ostensibly will pivot on whether ‘trade tensions’ warrant a shift toward easing. These are the very same tensions we’ve been reading about for nearly a year, and they were of such little concern as recently as a month ago that Fed chief Powell played down the possibility of a rate cut this summer. We knew better. Although the eggheads at the Fed would have us believe they use sophisticated tools to shape monetary policy, they are guided more by the stock market’s ups and downs than by anything else. Thus did the Dow’s 700-point decline earlier in the week evidently convince them it was time to intensify the managing of our expectations. We all know we are being played, but because the outcome is perceived as a win for everyone, the QE con-game cannot but work. But we might ask: Who actually wins when the Fed expands its balance sheet by purchasing public debt? Only an economic imbecile could believe that this epic charade can continue to provide us all with free lunch more or less indefinitely.