The Federal Reserve shot itself in the foot

By now, most understand that SVB failed due to an extreme mismatch in maturities between its deposits and its assets.  Can you believe that the Federal Reserve has fallen prey to the same mistake?  Further, the Feds' own actions caused its problems.

Ever since the Federal Reserve started printing U.S. dollars in 2008, called Quantitative Easing (Q.E.), we have expressed grave concern that the Treasury bonds the Fed was buying were short-term and therefore subject to a rising interest rate environment.  Further, those Treasuries decline in face value as rates rise.  That has all come to pass.

The Federal Reserve shot itself in the foot: since the same entity that printed dollars (Q.E.) invested those dollars (Treasuries), and then raised interest rates (FOMC), which impacted its income and its balance sheet (the value of the Treasuries also declined when the Fed raised rates), the Federal Reserve is the instrument of its own demise.

But fear not: these same regulators are well into ESG, DIE, climate change, and transgenderism.  This would be the ultimate comedy except that it harms everyone.  Rather than indulge in blame, let's work to solve the problem.

Ideas have power.  The underlying reason for these failures is an irrational belief in something bigger than us, something that can protect us.  In fact, such an entity may well exist, but it's not the government.

Many people believe that the entity bigger than us, and protecting us, is the government.  Herein lies the fallacy: our government can't protect us from everything, nor should it try.  Our own success or failure is our individual responsibility.  We can see that reliance on a bureaucrat to solve our problems has consequences: control. 

If we need to place our faith in a higher entity, then choose one far greater than a government agency.  In the meantime, start dismantling the mindset that government solves your problems and start taking back control of your lives.  The world of ideas is the best place to start.

Image: PublicDomainPictures via Pixabay, Pixabay License.

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