Economic Inflation Worries

Economic inflation worries are overblown. They have always been overblown ever since Jimmy Carter was President. Back then, banks were hawking CD's at unsustainable rates of 15% and more. Insurance companies were promising annuity rates just as high. Mortgage rates were also similarly high. Auto loans were equally ridiculous. There was an oil embargo that caused the price of oil to sky rocket and the supply to shrink. The people or economists who lived through this all blame "inflation" as the culprit.

It was not inflation. It was simply idiots in charge of everything. What kind of idiot was in charge of the bank making 30 year mortgages at 15% interest and expecting people to be able to pay that rate over the life of the loan? Or, how about a 15% auto loan? Really? I would have loved to be in the Board of Directors meeting listening to one of these idiots explaining why we needed to offer 30 year mortgages at 15% interest. I would have fired them on the spot for being so stupid.

What kind of idiot was in charge of the bank who paid CD's at the rate of 15% for a one year CD?  What kind of idiot was in charge of the insurance companies who promised annuity rates of 15% for 5 years no less? You read that right. For 5 years! They were doing it back then, believe it or not.

Paul Volcker, the Federal Reserve chairman was heralded as the savior who saved America from the evil culprit of "inflation." What a joke. He didn't save anything. The markets adjusted to the stupidity of the people running the banks and insurance companies. These bank executives and their Board of Directors finally got a clue that they could not pay 15% CD rates, loan money profitably on a 30 year mortgage at 15%, or a car loan for that matter. Paul Volcker did not have anything to do with it. Although, economists everywhere give him the credit for saving America from the ravages of "inflation." The market adjusted. It is called capitalism at work.

"Inflation" was not the problem. Stupidity was the problem. Ever since this period in our economy happened, we have been stuck with these Federal Reserve policy makers who are so scared of "inflation" that they think a 2% cap on "inflation" is all that we can handle. TWO-PERCENT! Are you kidding me? What is wrong with these people? They are so scared that we will see a repeat of the Jimmy Carter days of "inflation" that they have to stop it from happening at all costs! Anytime that the economy starts to do well, these Federal Reserve governors step in and put the brakes on. All in the name of saving the economy from the ravages of "inflation." They did it last December and the stock market immediately tanked as a result. Their justification was they were trying to get back to "neutral". Neutral? Neutral? Now, they are inserting a new Federal Reserve policy. Neutrality. What the hell is neutrality? It is some arbitrary number that they want to achieve that gives them some warm and fuzzy feeling. This is so freaking stupid it is simply unbelievable. Stupid is my favorite word, by the way. Read my latest version of Meet Wally Street. The Reason You're Stupid. 2nd Edition. https://www.amazon.com/Meet-Wally-Street-Reason-Stupid/dp/1720401543

Sadly, there is no common sense in the Federal Reserve's way of thinking. They are way over-thinking it. Take a moment and spend a few minutes looking at this page and you should come to the same conclusion that I did. The Federal Reserve has done an awful job of raising and lowering interest rates over time. https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135

Who bears the brunt of these poor decisions? The middle class. The people with a 401(k) who are trying to save for retirement. Just when the market gets going in the right direction, these Federal Reserve Governors, slam the brakes on the economy by raising interest rates at the most inopportune time, like December 2017. This kills the growth in the average middle class 401(k) account. Why on earth would the Federal Reserve Governors have a policy that stymies growth? Their answer is because they are worried about the "inflation" that they experienced personally when Jimmy Carter was President. They have never really evaluated this period in time. Like I said above. Stupidity was the problem, not "inflation."

Does anyone have any good old fashion common sense any more? I would make the case that "inflation" is a good thing and the market will correct on its own without intervention from these brilliant Federal Reserve Governors. Even in the most notorious inflationary period in recent memory, the Jimmy Carter Presidency, the markets corrected. It is called capitalism at work.

Alas, what can a peon like me do about it? All I can do is make my point and hope to change some ingrained (stupid) ways of thinking.