Data supporting the second quarter recovery thesis is nonexistent. Four out of four of the recent hard data economic reports have been negative.
Soft data diffusion indexes do not look so hot either.
Earlier today the Census Bureau reported the trade deficit widened. The same report shows retail and wholesale inventories declined by 0.3% each.
Advance Wholesale Inventories
Wholesale inventories for April, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $592.0 billion, down 0.3 percent (±0.4 percent)* from March 2017, and were up 1.8 percent (±1.1 percent) from April 2016. The February 2017 to March 2017 percentage change was revised from up 0.2 percent (±0.4 percent)* to up 0.1 percent (±0.4 percent)*.
Advance Retail Inventories
Retail inventories for April, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $613.5 billion, down 0.3 percent (±0.2 percent) from March 2017, and were up 3.0 percent (±0.5 percent) from April 2016. The February 2017 to March 2017 percentage change was revised from up 0.5 percent (±0.2 percent) to up 0.3 percent (±0.2 percent).
Fed Economic Outlook
Let’s compare what’s actually happening to Fed expectations as noted in Minutes of the Federal Open Market Committee Meeting on May 2-3.
Staff Economic Outlook
In the U.S. economic forecast prepared by the staff for the May FOMC meeting, real GDP growth was projected to bounce back in the second quarter from its weak first-quarter reading. The staff judged that the weakness in first-quarter real GDP was probably not attributable to residual seasonality and that it instead reflected transitorily soft consumer expenditures and inventory investment. Importantly, PCE growth was expected to pick up to a stronger pace in the spring, which would be more consistent with ongoing gains in employment, real disposable personal income, and households’ net worth. In addition, the sharp decrease in the contribution to GDP growth from the change in inventory investment in the first quarter was not expected to be repeated. Beyond the near term, the forecast for real GDP growth was a little stronger, on net, than in the previous projection, mostly due to the effect of a somewhat lower assumed path for the exchange value of the dollar. The staff continued to project that real GDP would expand at a modestly faster pace than potential output in 2017 through 2019, supported in part by the staff’s maintained assumption that fiscal policy would become more expansionary in the coming years. The unemployment rate was projected to decline gradually over the next couple of years and to run somewhat below the staff’s estimate of its longer-run natural rate over this period; the staff’s estimate of the natural rate was revised down slightly in this forecast.
Second Quarter Reality
- Wholesale Inventories: Down 0.3% in April. March revised lower from 0.2% to 0.1%.
- Retail Inventories: Down 0.3% in April. March revised lower from 0.5% to 0.3%.
- Trade deficit in April widens by 3.8% with exports down and imports up: Trade Deficit Widens, Exports Weak: Economists Miss the Mark
- Tax Receipts: Federal Tax Receipts Running Below Expectations
- April New Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year
- April Existing Home Sales: Spring Housing Flop: Existing Home Sales Decline 2.3 Percent, Inventory Issues Persist
- April Housing Starts: About that Strong April Recovery: Housing Starts and Permits Flop, March Revised Lower
- April Empire State Manufacturing Survey: Empire State Manufacturing Survey Turns Negative: Welcome News?
- April Retail Sales: Sales were at least positive (+0.4%), but they were well under economists projections: Retail Sales Disappoint Again: Department Stores Clobbered in 2017
Economists Conclude: Don’t Worry, It’s Transitory
Here was my interpretation after the housing reports yesterday.
Gotta love this quote: The staff continued to project that real GDP would expand at a modestly faster pace than potential output in 2017 through 2019, supported in part by the staff’s maintained assumption that fiscal policy would become more expansionary in the coming years
Say What? Yep, the Fed expects Trump fiscal policy to expand the economy.
Mike “Mish” Shedlock
Well the Fed needs the fiscal thrust to meet their inflation target since it can’t be done with monetary policy. The global debt financed price stability mechanism (DFPSM) is in trend until someone decides a surplus is prudent.
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When analyzing vehicle sales stats, one of the negatives is unsold inventory. So why isn’t decreasing inventory in other areas an economic positive?
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recessions are generally rebalancing of inventories from out of balance supply and demand. thats why recessions are typically economic positives despite being contractions. inability of an economy to wring excess from it brings the potential of deeper recessions. the big inventory buildup in this economy is in credit and its gigantic
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The post is talking about GDP. Declining inventories is calculated as a subtraction. Actually the calculation is a bit more complicated but since inventories had been rising the a decline will show up as a subtraction from GDP.
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So then, rising inventories of unsold cars on dealer’s lots counts as a plus for GDP?
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Rising inventories are outputs which is GDP. It doesn’t matter if they are sold or not for the calculation. Only the output in creating inventories counts. Again, it is more complicated than that. Relativity to previous inventory levels in part of it. I ignore GDP and only follow real final sales and real final sales to domestic purchasers.
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And, as I understand it, measurement of GDP also includes government spending.
GDP seems completely irrelevant. I am surprised Mish is so interested in it. Maybe it is because so many mainstream economists pretend it means something.
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In FOMC (minor) defense. The meeting occurred on may 2 & 3. Economic projections are supposed to be in hand by friday before (april 28th). So no April economic numbers posted yet … just remnants of The Great Trump Reflation Joke (march).
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What fiscal policy changes is Trump proposing that would actually increase economic activity?
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The first 3 that come to mind are lower personal income taxes (more money for consumers to spend and less borrowing needed), fewer government regulations holding back business activity, and lower corporate taxes. As you know Jon, the US has the highest taxes on businesses in the world. The last 2 are reasons many American companies like to do their business somewhere else.
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Don’t you just know it about half killed the Fed to admit that Trump’s policies will expand the economy!
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Moar war.
Trump doesn’t have votes to change tax code, revise Obamare etc
We don’t need any votes to start wars anymore, maybe Syria spilling over into Iran, or even a wildcard with NoKo
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I am not sure how you know how every congresscritter is going to vote on those things john, but you are right it is not going to be easy for The Donald to drain the swamp. 100% of dems and many RINOs are trying to keep it stinking.
But you seem unaware that Donny has already stopped a lot of the illegals from trying to get in our country, and he already wrote the E.O. that is reducing regulations.
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Crawling along at 1-2% is better than sliding backwards. As a “foreigner”, I am cheering for America to keep moving forward. Go USA!
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My reading is that BLS & other stats are historic lies. I rely only upon Shadowstats’ & Chapwoods’ 10% inflation & Case-Schiller 10 years trailing earnings plus fully extrapolated
cash flow statements without safe harbor opinions, covenant lite debt,etc.. We are well into recession implying subsidized wages to avoid a Pullman Strike & Civil War.
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Who cares what the Fed thinks? Most of the time they’re wrong.
If you routinely asked your neighbor what the weather was going to be like tomorrow and 4 out of 5 times he got it wrong….
WOULD YOU KEEP ASKING AND PAYING ATTENTION TO WHAT HE TOLD YOU???
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Often people talk about the weather when they either have nothing else to say, or they want to change topic. As the fed doesn’t really have a topic except some math, I guess it is that they have nothing else to say… or maybe it is their change of topic after having looked at numbers all day…and think they have found a way to transfer their calculations to the real world by talking to the next unwitting passer by about them.
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For all their math, formulas, calculations, equations, calculus and six figure salaries – it’s amazing how few times they actually get it right.
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If they figured out the answer they would be out of a job.
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It’s government. It’s impossible to be “out of a job”.
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No, I wouldn’t trust my neighbors’ forecast (except that time in the 90s when I had a housemate who was a forecaster for AccuWeather). But your neighbor doesn’t have the ability to rain baseball-sized hailstones down over house either. The only reason to listen to the FED is because they can ruin your portfolio with a few keystrokes.
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The mainstream media continues to parrot everything the Fed says in a never ending stream of upbeat stories. No wonder the guy in the street thinks it is all fake news. Almost all financial and business reporting is complete nonsense.
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All designed to keep the plebes hopeful. Just one of many useful mechanisms to keep revolution at bay.
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Sort of counter productive, if the statement read :
” Market is going to lose half its value in the next few days, you won’t find a job if you actually wanted one, cash is going to be so tight you will be sounding like altos , your property won’t find buyers ever and is worthless, your autos were sold to you at twice their value and are not worth a tenth used, banks will hike interest on borrowers but lower it for lenders, you won’t be able to afford enough gas to light a lamp, and taxes will double ”
After a few days everyone will probably feel pretty happy about their lot, and in the meantime have a chuckle… unless the fed actually got it right for once, in which case they will take all the blame, which they deserve just as much as people who listened to them maybe.
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Economists, Fed or not, cannot forecast correctly nor can they fix anything. Since interest rates are the price of loans, it is possible for the Fed to reduce the demand for loans right now by increasing rates. In booming economic times increasing rates doesn’t hurt the economy as the Fed is only following the market up. We are not in such times and increasing rates can have the effect of slowing credit creation which can slow down the economy. So it is important what the Fed does.
Remember, low rates have had bad side effects. We are caught in a dilemma. What would you do?
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The problem with low interest rates in a low-demand/low-wage situation is that new credit creation goes into asset price inflation instead of actual productive innovation. So I would raise taxes on assets. If I put a 2% tax on all assets, then I will only want assets that create a return greater than 2%. That puts a lid on loan creation for asset price inflation.
Then to make any return, investors have to invest in creating real businesses that produce something. Much riskier, but it would drive up employment and wages. Which would drive up demand, productivity and allow interest rates to rise back to normal levels.
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Tax assets: not a new idea. Many states do it already, especially here in tax land CA. The RE tax assessor used to tax every one of my 1500 avocado trees every year. I turned them into firewood. Now my tax bill is way down. “The power to tax is the power to destroy”.
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Yeah, I’m talking in theory. In the real world, people in L.A. will buy some little crap-shack for $2 million and rent it out for $2000 per month and lose money. Speculators screw up economics.
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OK if that is the real world jon, give me one example of someone who speculated on a house as you describe. I am not defending speculators and I know there are plenty of stupid people, but you do get a bit carried away.
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They taxed your trees – that is crazy. Couldn’t you just have said they aren’t yours to be taxed, but their own, that you were only helping them ? Personally, every time I have had authorities invite themselves into my life, it has cost dearly, not necessarily just moneywise – I really wonder what they are… I always get the impression that you are being made to make up for the errors of others, and you know all along as well that achievements are not reached like that, not even for those who take profit – it just reinforces their own failure.
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How about broadening the tax base to include colleges, non-profit foundations and pseudo religious buildings?
The biggest land holders in Boston and New York City (and probably many other cities) are churches and synagogues (and mosques, but they haven’t built up yet). Not talking about the actual church / synagogue itself, talking about the endless real estate holdings, administrative buildings etc.
Colleges are sitting on endowments that are obscene. Harvard is frequently referred to as a hedge fund that runs a little school on the side — endowment profits dwarf tuition (which itself is out of control). A decade ago, Boston forced local universities to make “voluntary” tax contributions (they “volunteered” after being told it would be mandatory if they didnt).
And how many corrupt ex-presidents and fallen movie stars really need to have a ‘foundation’ to force their warped ideologies on the world?
How come the libtards don’t want to tax these horrible abusive entities? Libtards want to destroy jobs and economic self sufficiency, while defending fraud?
PS — your stupid idea to double-tax if not triple-tax assets is going to hit non-profit endowment funds
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Pardon me, Mish, but with all these reports I get the feeling that no one seems to know or understand just what is happening with the economy. Like the words to “Lonesome LA Cowboy, all the economists are taking totes, snorting coke, and trying to get by until the next night comes along. So which is it, are things bad, are things good, or do we just not know? Right now I see a vast holding pattern waiting until the last straw is placed on the camel’s back and that appears to be very soon.
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That camel has a much stronger back than anyone is giving him credit for. I always think it’s the last straw and lo and behold his back never breaks. It may be years I think before this Ponzi scheme falls apart.
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I call it the miracle of fiat money. It’s a miracle it doesn’t go bust until it does. If I could predict the bust I’d become a billionaire or at lease a millionaire, but that is the problem. what we do know is that it will go bust. Lord loves fools and economists because he made so many of them, economists, I mean.
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One way to look at it is people pass tokens to each other as an exchange in trade. Those tokens have a meaning, the meaning being the cost of previously obtaining them. Once they lose the meaning attached to obtaining them, then it is just people exchanging tokens without meaning. Afterwards individually, and en masse, it goes around that ‘this is silly’.
Also people forget how to calculate and haggle own solution when there is a disturbance.The more saturated with money , the more fragile the economy has become, as as opposed to a limitless bounty that always provides, the whole discipline becomes finely tuned out of something whose meaning has become the tuning. That tuning is not organic, such as in the individual applications of value, but is a broad political swipe at making the values and people fit somehow…and it only works while they can fit, and only when people believe the promised incentives are worth believing in. After that people tend to start telling other people their values are right and what the values are, and often end up arguing or trying to force solutions on each other.
This blog https://econimica.blogspot.pt/2017/05/american-exceptionalism-decelerating.html has some charts that should make us wonder what is going on.
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I would believe that you are talking about the interactions of two principles. the first is that money (in whatever form it is denominated) is not a token but a third party to barter. The principle of barter is that you and I will transact an exchange of goods. I have something you want and you have something I want. Our bargain is the amount of the items we exchange. But if I have something you want and you don’t have something I want, no exchange takes place. You must find someone who has what I want and will exchange that good for what you have so you and I can exchange items. That is really all money is, three legged barter. The fact that most individuals never see it as such does not interfere with the principle.
The second principle is that supply and demand will reach equilibrium. It does not mean that the same price is reached at the same exact same moment across all markets. But in general, supply and demand will reach that price or cost point. Because it is an Equation, so to speak, means that a change in X for supply will cause a change in Y for demand.
Inflation is a condition where supply and demand never reach equilibrium. that is, there is too much demand for supply and that rise in price never reached equilibrium. Remember that price or cost is a two edge sword. Unless forced by some legal means, no producer will supply below his costs, hence price has an absolute downward limit. By the same token, no buyer will buy beyond his means to do so, even it we figure in debt. Thus price has an upper limit.
Inflation exists because supply is static or cannot rise quickly to meet demand. And demand is such that price has little dampening effect on reducing the numbers of individuals who want to buy.
Take food, for instance. In a season of poor production, food supplies become short. Still people must eat and so while the supply is limited, demand had not fallen but remains about the same. Thus prices inflate because demand has not fallen and price is not seen as a barrier. One does not stop eating just because the price of food seems too high (a qualitative or moral value). If the harvest is bountiful the next year, the prices will fall because supply has exceeded immediate demand.
the problem with inflation in one area is that it often carries over into other areas and thus increases producer costs. Wages always lag material and energy costs, so we have a push – pull effect to inflation.
Say energy costs rise by five percent. since almost everyone uses energy and few can do without it, we have the problem of not just a simple price increase but the makings of inflation if energy supplies remain static and if energy supplies actually decrease by another five percent then price rises again. For producers of good, an increase in energy prices are passed to the various consumers, whether they be other producers or retail consumers. But that five percent increase is a percentage. If my cost rise five cents, I pass along that five cents plus my expected percentage of profit on the total price so that I may raise prices by six cents rather than five cents. the cost of goods sold, the retail price, may rise by ten cents. thus the worker has an out of pocket rise in his expenses by ten percent. So he might go on strike of maybe there are cost of living raises that get triggered and his wages increase. But he never gets back that ten percent. Part of his wage increase goes into the government coffers. Maybe his union dues increase. Maybe the landlord raises his rent.
There are so many ways inflation affects our worlds. Of course when hyper inflation takes hold, this means that the people who use that currency no longer have confidence in its ability to purchase goods and services. Hence, they effectively barter their perceived worthless currency for goods that can be bartered for other goods. The local economy goes back to a barter system.
So yes, money is like passing tokens that have no inherent value, only a belief that they have value that can be exchanged for goods and services. In the case of money backed by more than a simple faith in its value, a value that everyone recognizes and has demand for itself such as gold, then the individual is far more likely to have confidence in the currency he uses. But fiat is simply a promise of value, none delivered. These are the basic principles of money and currency, which, by the way, are not the same.
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The point of incidence I am underlining in that is the ability to expand currency allowed to banks, at its simplest frl. In effect they have leverage over the third leg in the barter process. So inflation does not have to be a shortage that cannot satisfy demand as the banks will finance the wishes of a customer by increasing the supply of currency. That enables a customer to move beyond his means and compete with a higher price, or equally be reckless because he has not earned the currency he has been forwarded yet. The culmination of this arbitrage allowed to the banking system is a reduction of rates so that payment of outstanding debt by the borrower is washed away by easier terms and inflation itself. You might call that a legal imposition I suppose, but it is legal (!). So hyperinflation is not just the loss of faith in currency, it tends to occur in managed circumstance where the currency is made available at a rate which is designed to outpace rising prices, effectively denying them a limit. It is an exageration of what already occurs at a lesser more restrained level for us nowadays, and it usually is part of a political tool designed to satisfy a segment of society only – as the rest get closed out of the competition they simply give up on the currency. That leaves the currency increasingly in the hands of a smaller part of society, hence one that does not represent the real economy and its diverse input. The current socialistic approach with tuned management using different tools ( subsidy, welfare etc.) is still going in the same direction but with an inflation target as constraint. However to achieve that currency is having to be pushed into circulation, and probably because many have already become saturated it does go to an increasingly small subset. Being underwater is being saturated, where you have already spent your worth and cannot afford to keep what you own because the price is too high for you . Same difference as hyperinflation in the sense that you have rapidly become worth less, or nothing, instead of it becoming rapidly too high. Does it matter that no one else notices?
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The real problem is that things are not bad or good. We are just stumbling along with little change. You cannot count on the stock market because this is just a reflection of everyone hoping good times are just ahead. The problem is very little is actually happening. So the FOMC, stock market , economists and such are trying their best to talk thngs up.
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Forget reality.
They want to raise rates and will look for any excuse to cover.
It will stop when something breaks, not until.
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Maybe I’m missing something, or maybe it’s just drastically different in the US, but from where I sit, the economy is doing well, more people are working than ever before, and there are lots of job openings for highly skilled workers. The roads are crammed with expensive vehicles and the housing market is so strong that prices are beginning to get to unaffordable levels (a negative for those not in the market). The restaurants and movie theatres are full, and everyone is travelling abroad (some to the US). The only people who are struggling are those without Skills who end up working for temp agencies.
The biggest negatives I see are stagnant wage growth and in some cases, too much debt. Also the economy is only growing at around 2-3%.
However, many people here have me a little worried about the US economy and it’s possible effect on the global economy.
I’m hoping that it is merely unfounded pessimism, because from where I sit, the US should continue to grow at 1-2%.
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I see the same thing.
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Factories won’t return until after the affirmative action tax is repealed.
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Sorry, what is the affirmative Action tax? And aren’t American factories highly automated like in the rest of the world?
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Even if the exempt losers in Congress get around to repealing obamacare taxes…
What makes you think Berkley graduates are qualified to operate a toaster never mind a drill press? Have you seen the stupidity that place churns out?
How many college graduates are qualified to actually hold down even the most basic job?
People complain that many college graduates are working at places that don’t require a college education… but how many of these graduates are actually qualified to do anything else? I am not talking about their academic credentials (which are worthless), I am asking how many of them are qualified to do anything besides whine about safe spaces, whine about global warming, whine about gender identity, whine whine whine whine whine.
Too many recent graduates need a babysitter; they aren’t qualified for an adult job.
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“How many college graduates are qualified to actually hold down even the most basic job?”
None. Why would you expect them to? I learned nothing useful in college and almost everyone I ever hired out of school came to me with no knowledge to add to the job on day one. What it did give was a piece of paper that said I came from A University which is better than Universities B thru Z, and therefore you should interview me because I most probably have a higher potential capacity than that other guy.
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I had a very astute chemistry professor tell me a college education purpose is to teach you how to learn technical work in your field of interest. Not necessarily teach you what you need to know to do the job. Unfortunately there is little work out there for many liberal arts degrees besides activists.
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@wrldtrst — Why would you interview a candidate from college A or B or … Z? @Galbraith’s original comment was about expanding manufacturing (factories in his/her words) … but I don’t know of any college grads qualified to work in a factory or an office. It doesn’t matter which piece of paper they have (A thru Z), they all need babysitters.
A generation ago we could argue about Berkley vs Harvard vs Stanford vs MIT (vs …). My company literally stopped recruiting at college campuses (ALL college campuses), because the cost of interviewing exceeded the contribution these children could make in the first year. We had dozens of automation projects that required existing staff time — taking time out to do interviews was costing us, and the automation (once completed) reduced the need for entry level staff. Its kind of embarrassing, but we figured “let the other guy waste his time/money training them”
Most of these children completed 21 laps around the sun, but they don’t think like adults. Some have technical skills, but even the sciences have become politicized. Where is the control for the global warming “experiment”? If there was any science going on, the experiment needs a control to establish causality — that is high school science, not college.
The “science” argument about solar power apparently boils down to costs (which is accounting or business, not science) — but every college child seems to think solar power installs itself, uses zero scarce metal ore (which mines itself?) and the panels somehow produce electricity when its cloudy or dark… because the costs have come down so much? Price (not cost) came down because of government subsidies, but that isn’t a science argument.
The list goes on and on. These children have been programmed what to think on every political opinion question in the land, but they don’t have even basic critical thinking skills.
Let’s not ask how many college grads it takes to turn on a drill press or a lathe — forget about operating one.
China probably doesn’t have as much of a labor cost advantage as they once had, but they have masses of workers who recently moved from farm to city — and know how to operate basic machinery. The US has college infants who have been programmed to parrot their extremist left-wing indoctrinators.
That is why its tough to have a successful factory in the US — a failed education system, on top of which the ghetto ex-president added over priced health costs.
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Just because you’re a poorly educated schmuck doesn’t mean the rest of the world is.
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“the Fed expects Trump fiscal policy to expand the economy.”
I would say “the blind leading the blind” but it seems too kind…
A quick check with Wikipedia reveals the centuries old original…
“traced back to the Upanishads, written between 800 BCE and 200 BCE”
“Abiding in the midst of ignorance, thinking themselves wise and learned,
fools go aimlessly hither and thither, like blind led by the blind.”
The original is always the best.
So, let’s say…I did say…that.
And no one else ever did.
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Congress and Trump don’t want to fix anything,
Recession is a given.
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No matter what ridiculous and unsupported accusations WaPo and NYTimes pull out of their rear ends, they still haven’t produced a shred of actual evidence to back their own fantasy links to Russia. Its still “anonymous sources”, who’s accusations never pan out — with the notable not-anonymous exception of the failed MI6 agent who was identified as a complete and total fraud.
Obama more than doubled on-balance sheet debt, on top of a balance sheet that was already over loaded. Off balance sheet debt exploded even more than that — with too many academics trying to convince the public that 30% Obamacare premium increases can be paid out of an economy growing 1/10th as much.
How many Harvard / MIT professors does it take to figure out 30 > 3 ???? Is a academic degree from these crazies really worth it? Ask a 1st grader to explain 30 versus 3.
With ghetto president’s debt burden and a failed “edookashun” system that teaches safe space PCisms instead of basic math … no leader is going to create HUGE growth. Not Trump, not George Washington, not JFK, not Reagan, not anybody.
Too much debt combined with a failed education system means it will take at least a decade to undo the fiscal damage. Add a bureaucracy that puts themselves ahead of the public they were supposed to serve…
At the same time, the evidence is absolutely overwhelming that zero interest rates and QE don’t work. Everyone knew this when that idiot Bernanke proposed it — it had been failing in Japan for 12 years before Bernanke did it, and its still failing in Japan. Not working in the USA. Also failing in Europe.
Which brings up the question of why Mish keeps fighting the idea of trying something other than a proven failed policy. Yes, the economy is stagnant — no argument there. But one has to be REALLY slow in the head to think more zero interest rates and more QE will fix things.
If anything, QE and ZIRP have prolonged the suffering — encouraging a bigger debt binge when the country couldn’t really afford the debt we already had.
Bernanke is a fraud, and so is anyone who thinks low interest rates are going to get the country out of stagnation.
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“Say What? Yep, the Fed expects Trump fiscal policy to expand the economy.”
It is not just the Fed. It is many others as well. What do you think Randy Paul thinks about Trump’s fiscal policy?!
We have always been (and always will be) just one more tax-cut-for-the-rich away from trickle down finally working its magic.
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The Fed also expected zero interest rates and quantitative easing to work — despite the overwhelming evidence that it would not
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Go ahead. Fight the Fed. See what happens.
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The Fed is fighting itself, and it seems to be “winning” (wrecking their own credibility).
Yes, I know what Marty Zwieg said a few decades ago, but I listened carefully to what he said between the lines — not just the quote in media headlines.
The Fed is destroying the national savings pool in a failed attempt to get people to invest more capital in the economy. The Fed is destroying the source of its own power
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