The Fed: Should We Care What They Say?

Why does anybody care what the Fed or Janet Yellen has to say?

Bullion.Directory precious metals analysis 20 February, 2015
By Terry Kinder
Investor, Technical Analyst

It’s a curiosity why anyone in the gold community listens to the Fed or its Chair Janet Yellen. Yellen’s flip flop on whether oil prices are good or bad for the overall economy is just one in a string of Fed bloopers. Why in the world is a solitary Goldbug interested in the Fed’s actions at all? Why do so many commentators hang on every word of the Fed as if every word from the central bank is pregnant with meaning?

The mainstream and alternative media cover everything from red-lining the differences between the most recent minutes of the most recent Federal Open Market Committee (FOMC) meeting versus the previous one, to detailed analysis of what various members say in their public statements. It reminds me a bit of the Cold War and the Kremlinologists. Although the Fed is a private corporation, they resemble every other government entity in that the only real reason to follow what they do or say is to be aware of what possible damage they are about to wreak on the economy. Aside from that, it appears an utter waste of time and breath to speak about Yellen and company.

Another oddity is members of the gold community attempting to read the Fed tea leaves for signs of whether or not the Fed will raise interest or launch another version of QE. I almost get the impression that some would like to see more QE hoping it will boost the gold price.

Overall, it just seems strange that someone who holds gold would spend much time worrying about what Janet Yellen or other Fed members have to say. After all, gold is in large part a hedge against the Fed’s hubris in believing they are somehow smarter than the market and prices and can manage not only the U.S. economy, but that of the world as well.

In many ways the Fed is the great contra indicator. Listen to what they say is true and believe the opposite. Read what the Fed says is good for the economy and know that the truth is 180 degrees opposite to whatever they have said it is.

You’re about as likely to learn about the economy by watching Keeping Up With the Kardashians as you are from reading the latest FOMC statement. At least the Kardashians know what it takes to run a profitable business.

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