Friends and family have been texting me pretty often lately. Way more often than usual. I get messages like “How does this make any sense?” What they are asking about is the economy and news cycle compared to the stock market.
While everything else seems tense and confusing, the markets continue to roar higher after a swift drop in March. The Nasdaq-100 is up 15% year-to-date. 15%! While most people think the world is ending, the tech industry is raining dollar bills.
I’ve been thinking lately: who has more power the Federal Reserve Chairman or the President of the United States?
Watching the market roar in the middle of a massive economic conundrum, it’s starting to seem like the most powerful person on Earth is the Fed Chairman. This person can take gobs of money and buy Treasuries, ETFs, and provide credit to banks at an absurdly low rate. Actually, he could give credit to banks at a negative rate if he so pleased. The point is, I would rather be on the Fed’s side than the President’s side.
There is a saying that has been going around for nearly 100 years and it goes like this: “Permit me to issue and control the money of a nation, and I care not who makes its laws!”
If you want to make money and understand what’s really going on in the economy, and throughout financial markets, you should stop worrying about the soap opera at the White House and instead start learning about the Federal Reserve, its policies for providing liquidity, its board members, and the actions it can take to make the money printer go brrr. It’s becoming increasingly clear, especially since the 2008 Financial Crisis, that the Fed Chair is the most powerful person on Earth.