Trade The Journey

Trade The Journey

Two Goals of the FED

As I continue to progress in my understanding of Finance, Economics, Politics and many other facets of human psychology, two things have become clear.

There are freedoms and their are profits. There is the freedom to make a profit in the United States and a freedom to do progress as far as your imagination can take you. Then there are profits, apt for the taking and they are often taken at the expense of others. 

There are two things that the FED keeps its eye on and that is: employment and price stability. As you may or may not know our economy is based on consumer spending, about 70% of our GDP comes from consumer spending. If you are have time, researching how other countries around he world produce their products and what consumption habits they have, can be eye opening.

Another interest rate hike? You betcha. Why would the FED Chairman want to place a heating economy in the refrigerator by increasing the amount paid for borrowing. There is a fear that is begin to circulate and become more apparent, that there are indeed cracks beginning to appear. 

As prices begin to increase (Inflation), things become more expensive and that begins to contribute to overpriced assets, overpriced consumer goods and increasing supply once the economy starts to overproduce.

To prevent this debacle, the FED has to do its best to prevent this by judging where the economy is and where it is heading. I’ve learned to keep my eye on the employment situation and the prices whether it be affecting consumers or producers.

All this time, I never truly understood that the Economy is run by people, people prone to mistakes and errors in judgment. But we also have a collective wisdom that is hopefully never lost.

Thoughts?

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