I know what I know and that is all.

For those who have followed me, know that I am pretty good at calling the Fed over the last decade.  During the period of 2010-2015, after the markets were saved, @dividendmaster (on twitter) and I use to have yearly bets on what the Fed was going to do. Most years it was nothing, even though they huffed and puffed about raising rates.  For about 4 years running I won our yearly bet.  In the fifth year, he finally won the bet, in December.  (I'm being approximate here, I'm too lazy too look it up, but you get my drift).

During the period when the Fed left rates alone, I would argue: "How strong could the economy be if the Fed was afraid of getting rid of ZIRP (Zero Interest Rate Policy for you newbies). 

Since 2005, I have argued the only thing the FED cares about is the stock market.  America, as a country, values itself solely on stock market valuations.  The country could be humming along,  full (real) unemployment, political harmony, and finally even with everyone, black, white, yellow, singing Kumbaya in the streets if the stock market was in the shitter, the Fed would be responsive.

Let's take a look at the markets today.  Since the night Trump was elected, and remember the futures that night showed a -1000 Dow reading, the market has gone insane up what 40% at the ATH? (Again, to lazy to look).  Unemployment is at "record lows" and until recently the markets were humming along.

Given this backdrop, the Fed was talking and actually acted tough for a while.  However, throw in a few falling economic numbers and things didn't quite look as rosy.  Never mind in my 51 years on this planet I have never seen this country torn apart, politically, as it is today. (I'm too young to remember the Vietnam war and what that was actually like.)  But through this period the stock market held up beautifully, so it was full steam ahead for the FED.

But oops.  The stock market had a 10% correction from all time highs and Trump threw a few grenades toward Powell via Twitter.  So what happens?  The Fed goes into full panic mode and Powell comes out and says things are getting weaker and the hikes are pretty much done.  Ok.  Whatever.  Are the markets even allowed to have a general run of the mill correction anymore?  If every time the market goes down for an extended period is Cramer going to whine on real money?

The Country and the markets MUST be allowed to have normal economic cycles.  Stifling the negative cycles will only make those cycles that much worse when the inevitable comes do.

The following figures I DID look up:  Since 1972 the cumulative average of a 30 year mortgage is 8.10%.  For comparison the average today is roughly 4.90%.  (http://www.fedprimerate.com/mortgage_rates.htm)

Ok, so you scream to me "But the 1972-2018 had extreme periods of interest rates, as high as 18% in 1981 and the lowest in January of 2013 at 3.41%.  So let's look at interest rates from 1921 though 1947.  Looking at various charts rates ranged from a high slightly above 6.0% in 1921 down to a rate slightly lower than 4.5% in 1945.  The last year in the chart I'm looking at is 1956 and rates were at 5%.

When I first got into the selling bonds for a living in 1991, one of the first bonds I can remember selling was a 8 year PA Turnpike Bond, AAA (when AAA meant AAA) at 6% at par.  Only the shittiest of a shit muni will yield 6% today. 

My point is at some point the FED has to forgo the stock market to bring rates back into historical normalcy.  The FED needs to grow up and normalize rates the markets be damned.  I argued during the Great Depression that the FED should have burned it all down and started fresh.  IMO, the gov't should've announced they were seizing troubled banks, guaranteeing deposits and letting the Country go to even greater levels of shit than it went to.  Let the rain wash away ALL the filth if you will.  It would have been survival of the fittest amongst the banks.

Shall I even get into the fact how the FED though their interest rate policy has pushed savers out of the banks into the markets?  If checking and savings accounts (hell, even CD's) came back to historical norms, how much money would flow out of the markets? 

Ohhhhh........I get it now.