One of the best ways to understand national policy and investment community direction is to watch the actions of the Federal Reserve and the policies they set forth. Much of what they do is based on analysis and forecasting of markets to determine which policies are going to help the nation reach its economic and fiscal potential. Economics can be complex and full of lots of different formulas (I tried a few....) but there is also some good old fashion management technique/experience in the process of forming guidance for the rest of the nation (Remember that numbers are fictitious by nature but we put meaning to them as units of actual something in our environment such as employment opportunities, money availability, etc...that anchor back to the beginning of trade and barter systems. These numbers represent environmental/actual experiences and activities and thus valid calculations can project out with relative accuracy what would happen to real activities in the market; assuming no nonlinear events occur. They are calculated forecasts based on past research into historical economic data. Thus, metrics are only as good as the knowledge and awareness of "real" activities on the ground and that takes an experienced group at the very top to ferret out a workable number. Thus, fictitious calculations meet with subjective experience and social negotiation to create a magic interest rate number! 🧙 .....and that is necessary to model the market and encourage private investment to follow suit. Market management is partly base on the large influence of Federal Money and the guidance banks/investors need to set their course in alignment with those policy changes.💨). There is a careful analysis the Federal Reserve does before setting a rate that will influence lending and investment in the economy and in turn what you might pay on your credit card bills. (BBC Fed Interest Rate Explanation).
Supply Chain Bottlenecks:
Federal Chair Jerome Powell stated GDP increased 6.4% over the first half of the year and forecasts a lower second half of the year. Inflation is expected to be high in the short run and then moderate a few months down the road (I think he means a few months). Some inflationary pressures are related to bottlenecks in the global supply chain that is limiting short-term supply that pushes product prices upward. (I'm working on some theoretical stuff so I'm trying to relate what the Fed is doing and how my models would be impacted by such changes.) Reducing supply chain risks and costs may mean revamping and shortening those chains (U.S. Can and MX) and making them more adaptable to world/geographical events. Theory of Constraints and Adaptive Supply Chains Environ Events and Manufacturing and Great Lakes Shipping Infrastructure.
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| Delta County Infrastructure Start Ups/Invest? |
One of the best ways to gain a more detailed understanding of what Fed Chair Powell states is by reading 'Transcript of Chair Powell’s Press Conference Opening Statement September 22, 2021'.
Stock Reaction to News
Investors and executives watch Fed activities closely to determine what their next step should be and where the most solid returns lay. An article by Jonathan Ponciano entitled, 'Stocks Rally After Fed Sticks To $120 Billion Monthly Stimulus' provides a solid analysis of how stocks and investment reacted to Federal Chair Jerome's Powell's Press Release 09-22-21. Stocks rallied as investor fears of a government policy change may impact the current investment markets. The Federal Open Market Committee Press Release indicated they will maintain A low interest 0% and 0.25% rate will keep investments (The Fed has some info on Lift Off and Natural Interest Rate. I think that is what he is referring to.🤷)
Ethics and Fed Discussion
Another topic that came out of the meeting was ethics and some questionable trade by key Fed officials. Integrity throughout the entire socio-political spectrum is important and maintaining trust (which is what the dollar is built on.) is what keeps the entire system open to positive economic trajectories. There also some discussion on the potential for new/updated rules of senior Federal Officials and trades that may/could be impacted by their policy decisions.🙅 For more information on those trades and who you may want to read Thomas Franck's article, 'The Fed will change trading rules for officials to keep public’s trust after controversy, Powell says'
Regulations:
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| Regulations and Long Term Strategy |
Regulations are often opposed by business but they are a necessary evil to ensure that business and community members are working toward the same goals and considering wider stakeholders in their decisions. At the same time, if not thought out well it can limit the business climate. It is important to review legislation regularly, streamline when helpful, and either remove or revamp that which is hampering business and national development (Keeping in mind the ultimate stakeholders the people.). We need regulations but we need them to foster ethical practices in business as well ensure the interests of wider stakeholders are considered in a way that still enhances business investment and development. (It is important that when our business and government act in ethical ways the overall benefits to society and to their growth prospects increase. Research has supported, which I'm not going to dig out now zzzz, that corruption/intentional mismanagement leads to decline for business and government. Being transparent and honest and is important and I think Federal Chair Powell is doing that and has made a genuine commitment to maintaining that public trust. Reducing Ineffective Legislation and "Honest" Govt. )
Side note:
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| The Working Economic Hub |
In my generic hub-cluster map we would find that the supply chain would limit some of the availability of natural resources. Lower interest rates would also encourage investment and borrowing to start businesses within the Delta County Model and reverse the capital outflow per World Report FDI. Its really generic and could go into significant depth to all of the transactions that would occur but it sort of looks like that. Federal policy matched with tax benefits for R&D within these clusters might be something interesting to explore and create an investment hedge against outflows and international market disruptions while at the same time improving business infrastructure in the U.S.. Venture Adventure Cap and Attracting Start-Up Firms, 1920's Again Morgan Stanley (Or Other) Pro Social Invest, "Connect" UP, Small Business Backbone, Economic Structure Synergy, Unfinished Transactional Cluster Theory In theory you want to try and "wrap the bow" making the theory self contained. I'm kind of working on connecting the dots from material extraction through a complex chain of "most likely" events that leads to a "most likely" outcome. 😩 Yikes....self reflection.....I need more exciting pursuits. Still haven't ruled out Mount Everest.
Sorry for spelling and grammar errors....its a blog not an academic paper.
The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months, but the rise in COVID-19 cases has slowed their recovery. Inflation is elevated, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
The path of the economy continues to depend on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals. Since then, the economy has made progress toward these goals. If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.
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