The Fed seems to get a bad rap all the time.
It was created to stabilize the U.S. economy and banking system, but it seems like it gets blamed for every bad thing that happens in the economy.
So, we asked our audience what they think of the Fed.
And this is what we learned
In our admittedly unscientific and anonymous survey, 75% of respondents said they don’t trust the Fed.
Their reasons ranged from the Central Bank being political to being outright corrupt.
Let’s take a look at some of the responses:
“The Fed is not part of the federal government and has no reserves. All they do is print money, which is the cause of inflation.”
“They manipulate the economy, need to let free markets decide.”
“Powell is way behind the curve.”
“Controlled by politics.”
“They manipulate the economy to fit their ideal. We usually pay for it.”
“I think the Fed is no longer an independent body; it has become another arm of government.”
“Hidden agenda for self-interest.”
Since 75% of respondents said they don’t trust the Fed, that means 25% actually do trust the Fed.
They seemed to have faith that the Fed is at least trying to do its stated job, even if it seems to fail at times.
Take a look at some of the responses:
“Jerome Powell will do the best he can under the current environment to get unemployment numbers down and raise rates.”
“They tend to be a rather stable hand, especially in comparison to the government.”
“I trust they will TRY to act in the best interest of the greatest amount of people but will make mistakes along the way, some bigger than others.”
“I trust they know what tools they have in their toolbox and they will use them as they have told us.”
The Central Bank’s mandate from Congress is to “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”
The Fed accomplishes these goals by lowering and raising the federal funds rate and manipulating the supply of money in the banking system.
But some respondents to our survey had a much different idea of what the Fed actually does:
“Buy stocks”
“They think of ways to screw the poor and cater to the rich and mainly themselves.”
“Mess up the economy.”
“Uses the American people like pawns in a game of chess depending on the political wind.”
“Cause market volatility during the day – when a press release after hours would suffice.”
“Create opportunities for insider trading and front running, amplifying cycles, negating economic theory.”
Many respondents to our survey had suggestions for what the Fed should be doing instead:
“They shouldn’t do anything. They need to let markets behave as markets should behave.”
“Dissolve itself.”
“Setting fiscal policy that does not favor one political party over another one.”
“As little as possible, get the hell out of the way and let Americans lead.”
“Let the market be, and do its thing. In the end, the market always wins.”
“I think the Fed should be abolished.”
75% of respondents to our survey answered “yes” when asked if the Fed will cause a recession in 2022.
25% answered “no”.
And this is a big concern for many in the market right now.
Even the Fed Chair himself has admitted it is a possibility, although Powell says they’re still confident they can accomplish a “soft landing”.
The reason many believe the Fed might cause a recession is that it got behind on inflation.
Now the Fed is playing catchup with rates and the May meeting minutes show many officials believe they will have to push past neutral.
And pushing monetary policy into a restrictive stance threatens economic growth in the U.S.
68% of respondents to our survey answered “no” when asked if they think the Fed will reduce inflation in 2022.
32% answered “yes” to that question.
But the truth is, the Fed will get inflation under control at some point.
The question is, at what cost?
It’s not just our audience that doesn’t trust the Fed.
Morning Consult found Americans’ trust in the Central Bank tumbled at the end of 2021.
Just 52% of U.S. adults said they had “a lot” or “some” trust in the Fed.
That was down 12-points from the all-time high of 64% in March 2021.
The drop came as inflation surged and Americans felt the Fed was taking too long to respond.
So what do YOU think about the Fed?
Let us know in the comments!
I think 9 trillion was excessive qe overall.Inflation started with asset prices and since due to war and pandemic moved to every thing else.The fed trying to make demand match with restricted supply.
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