Stagflation
The Federal Reserve is - as I type - continuing to e-print money and interest rates are still at zero. Jay Powell and the rest of Fed have created a financial crisis via loose monetary policy. At least the fourth serious crisis created by the Fed (see my PBS article "End the Fed").
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| The Fed has created inflation |
The Fed is so far behind the curve, it is being lapped.
Over the last two years, The Fed has pursued the loosest monetary policy in the history of the United States. Zero interest rates and the e-printing of almost $5 Trillion. Now that the Fed has realized the inflationary consequences, it is talking about tightening monetary policy.
While the Fed is talking about tightening policy, it is actually still printing extra money every day. By the time the Fed actually raises interest rates, the economy might be in recession. So the Fed will have to loosen monetary policy again -- even before it has started to tighten.
The Fed's utter incompetence should make the rest of us feel great about our lives. Fired from your job? You are still better than the Fed. Do you coach a winless team; still better than the Fed. You drove your car into a ditch? Not bad, compared to the the Fed that drove the country off the road.
January 2022 performance
The Dow Jones Industrial Average lost 3.30% in January 2022 while the Chicken Little portfolio lost 0.79%.
January 2022 was a negative month for most assets. Crypto was the biggest loser, while stocks around the world slipped. The 'safety' trades of gold and treasury bonds also lost money.
February 2022 portfolio position
The Chicken Little Portfolio remains mainly in cash with a significant short position in US stocks. See Chicken Little Shorts Stocks (again).
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Why do I keep shorting stocks? Because I believe that a Fed-created crisis is inevitable, and the rise in inflation and interest rates that we are seeing may be a sign that the crisis is imminent.
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