The Fed is a One-Trick Pony

by William L. Anderson

In slashing its key interest rate to zero in response to the economic calamities imposed by all levels of government ostensibly to fight the coronavirus, the Federal Reserve System is trying to regenerate the crashing stock market. At opening bell right afterward, however, the market continued to crash, and those results perhaps should be telling us that the Fed’s one-trick solution to economic crises is just that: a trick.

Please understand that the central bank is doing what it always does when it seems there is an emergency: print money. Now, this is not like what we see in Venezuela, with wads of printed money lying in gutters or even what was seen in Weimar Germany in the fall of 1923. In contrast, the Fed wants us to see Very Serious Central Bankers ensuring that an imploding economy has plenty of “liquidity.”

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