Fact: recessions happen. Fact: on average, they arrive 58 months after the last recession. Final fact: it’s been 73 months since the last one.
If talk about the so-called “deep state” has any merit to it whatsoever, then this is the place you ought to focus your attention: the Fed. There’s a good reason for that, too, that doesn’t involve any conspiracy theories.
It’s the fact that they have been granted an exclusive monopoly over the most marketable commodity in the world: money. They have direct control over the monetary supply, which is the central economic institution.
Every so often, the financial news media comes to life with reports from the Federal Reserve chairman and board of governors. Janet Yellen is the current chairman of the board.
Have you ever wondered why any of that matters to you?
The main reason you should pay attention is because the Fed determines if there’s going to be a recession. For you, that could mean losing your job if you aren’t prepared for it.
INTERPRETING THE JARGON
But here’s the problem: the Fed speaks in technical jargon — I’d say it’s more like gibberish. That makes it hard for regular people to understand what they’re talking about. This is intentional. It’s like a priesthood. The priesthood is granted special knowledge. It keeps the laity away from this knowledge by shrouding it behind a veil of mystery. In this case, the veil is technical jargon.
Fortunately for us, one branch of the Fed publishes all kinds of charts. It updates them weekly. We can pay attention to what the Fed is doing by simply following the charts. It helps to know how the Fed’s actions impact the economy first, though.
So let me break it down. It’s easy.
If the Fed is expanding the money supply, which they call the monetary base, this is called “inflation.” The monetary base is called high-powered money (at least, in the past, prior to 2008 when everything changed). When the Fed is “inflating,” they are attempting to either kick-start an economic boom, or else keep one going.
If the Fed has stopped expanding the monetary base (keeping it stable, or flat), or actually started contracting it, then it is trying to engineer and economic recession.
That’s all there is to it, really. Is the monetary base expanding? Then the Fed is trying to create or sustain a boom. Is the monetary base stable or contracting? Then the Fed is trying to initiate a bust.
Now, let me show you one of these charts I mentioned…