{"id":18777,"date":"2011-01-27T14:50:45","date_gmt":"2011-01-27T19:50:45","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=18777"},"modified":"2011-01-27T14:50:45","modified_gmt":"2011-01-27T19:50:45","slug":"what-most-people-dont-realize-about-the-feds-superpowers","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/01\/27\/what-most-people-dont-realize-about-the-feds-superpowers\/","title":{"rendered":"What Most People Don&#8217;t Realize About The Fed&#8217;s Superpowers"},"content":{"rendered":"<h3><span style=\"font-size: small;\">Bob Prechter&#8217;s Conquer The Crash reveals whether the Fed really can rescue the US economy <\/span><br \/>\n<span style=\"font-size: small;\"> <\/span><\/h3>\n<h3><span style=\"font-size: small;\">By Elliott Wave International<\/span><\/h3>\n<p>Since its creation in 1913, the primary intended role of the                   U.S. Federal Reserve Bank has been that of protector. In theory,                   the central bank was bestowed with the power to shape monetary                   policy in a way that would keep both booms and busts in check.                   The two main tools at its disposal &#8212; interest rates and money                   creation &#8212; would provide a &#8220;ceiling of normalcy&#8221;  above                   expansions AND a &#8220;net of safety&#8221; below contractions.<\/p>\n<p>To this day, the financial mainstream holds great faith in                   the Fed&#8217;s ability to fulfill its save-the-day duties &#8212; as                   these recent news items make plain:<\/p>\n<ul type=\"disc\">\n<li><em>&#8220;Why Raising Fed Funds Rate Is Positive For Equities.&#8221; <\/em>(Seeking                     Alpha)<\/li>\n<li><em>&#8220;Fed&#8217;s Moves Lift All Asset Classes.&#8221; <\/em>(Associated                     Press)<\/li>\n<li><em>&#8220;US Stocks Erasing Losses: The aggressive moves                       of the Fed have been an important driver for the stabilization                       of stock prices.&#8221; <\/em>(Bloomberg)<\/li>\n<\/ul>\n<p>But of all the variables the Fed creators took into account,                   there&#8217;s one glaring factor they neglected to consider: Namely,                   it cannot force consumers to spend, creditors to lend, or businesses                   to borrow. The events of 2007-2009 &#8220;credit crunch&#8221; and                   the subsequent &#8220;Great Recession&#8221; made that obvious.                   Remember how the government was upset at banks for sitting                   on the bailout funds instead of lending them out to consumers?                   And consumers weren&#8217;t exactly lining up on the street to get                   a loan, either.<\/p>\n<p>The Fed&#8217;s inability to change social mood is the central theme                   in Chapter 13 of EWI President Bob Prechter&#8217;s NY Times business                   bestseller book <span style=\"text-decoration: underline;\"><strong><em><a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=&amp;rcn=aa164&amp;dy=aa012711&amp;url=http:\/\/www.elliottwave.com\/club\/protect-yourself.aspx?code=27742%26articleid=2001\">Conquer                   the Crash<\/a><\/em><\/strong><em>.<\/em><\/span> There, Bob describes                   the Fed&#8217;s strategy of lowering the federal funds rate to stimulate                   spending to be as effective as <em>&#8220;pushing on a string.&#8221; <\/em>Writes                   Bob:<\/p>\n<blockquote><p><strong>&#8220;The primary basis for today&#8217;s belief in perpetual                     prosperity and inflation with an occasional recession is                     what I call the &#8216;Potent Directors Fallacy.&#8217; It is nearly                     impossible to find a treatise on macroeconomics today that                     does not assert or assume that the Federal Reserve Board                     has learned to control both our money and our economy. Many                     believe that it also possesses the immense power to manipulate                     the stock market. The very idea that it can do these things                     is false.&#8221; <\/strong><\/p><\/blockquote>\n<p>And so begins one of the most groundbreaking studies into                   the very real INABILITY of the Fed to fell the great bears                   of economic declines, or to feed the great bulls of economic                   vigor.<\/p>\n<p>The best part is, you can read Chapter 13 of <em>Conquer the                     Crash <\/em>in its entirety FREE via a Club EWI resource <span style=\"text-decoration: underline;\"><em><strong><a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=&amp;rcn=aa164&amp;dy=aa012711&amp;url=http:\/\/www.elliottwave.com\/club\/protect-yourself.aspx?code=27742%26articleid=2001\">&#8220;You                     Can Survive And Prosper In A Deflationary Depression.&#8221;<\/a><\/strong><\/em> <\/span>The                     free report also includes SEVEN other chapters of <em>Conquer                     the Crash <\/em>that shed equal light on some of the most                     misleading notions of mainstream economic wisdom.<\/p>\n<div>\n<p>Don&#8217;t stay in the dark. Read all 8 chapters today by joining                   the rapidly expanding free <span style=\"text-decoration: underline;\"><strong><a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=&amp;rcn=aa164&amp;dy=aa012711&amp;url=http:\/\/www.elliottwave.com\/club\/protect-yourself.aspx?code=27742%26articleid=2001\">Club                   EWI community today<\/a><\/strong>. <\/span>Here&#8217;s what you&#8217;ll learn:<\/p>\n<ul type=\"disc\">\n<li>Chapter 10: Money, Credit and the Federal Reserve Banking                     System<\/li>\n<li>Chapter 13: Can the Fed Stop Deflation?<\/li>\n<li>Chapter 23: What To Do With Your Pension Plan<\/li>\n<li>Chapter 28: How to Identify a Safe Haven<\/li>\n<li>Chapter 29: Calling in Loans and Paying off Debt<\/li>\n<li>Chapter 30: What You Should Do If You Run a Business<\/li>\n<li>Chapter 32: Should You Rely on Government to Protect You?<\/li>\n<li>Chapter 33: A Short List of Imperative       &#8220;Do&#8217;s&#8221; and                     Crucial &#8220;Don&#8217;ts&#8221;<\/li>\n<\/ul>\n<p>Keep reading this free report now &#8212; all you need to do is <span style=\"text-decoration: underline;\"><a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=&amp;rcn=aa164&amp;dy=aa012711&amp;url=http:\/\/www.elliottwave.com\/club\/protect-yourself.aspx?code=27742%26articleid=2001\">create                     a free Club EWI profile<\/a>.<\/span><\/p>\n<\/div>\n<div>\n<p><em>This                     article was syndicated by Elliott Wave International and                     was originally published under the headline <a href=\"http:\/\/www.elliottwave.com\/r.asp?acn=&amp;rcn=aa164&amp;dy=aa012711&amp;url=http:\/\/www.elliottwave.com\/freeupdates\/archives\/2011\/01\/25\/What-Most-People-Don-t-Realize-About-The-Fed-s-Superpowers.aspx%26articleid=2001\"><strong>Basic Wave Patterns: How a Zigzag Differs from a Flat<\/strong><\/a>.                     EWI is the world&#8217;s largest market forecasting firm. Its staff                     of full-time analysts led by Chartered Market Technician                     Robert Prechter provides 24-hour-a-day market analysis to                 institutional and private investors around the world.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Since its creation in 1913, the primary intended role of the U.S. Federal Reserve Bank has been that of protector. In theory, the central bank was bestowed with the power to shape monetary policy in a way that would keep both booms and busts in check&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-18777","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/18777","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=18777"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/18777\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=18777"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=18777"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=18777"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}