The Fed and Most Economists Are Nothing More Than Glorified Weather Rock Analysts

I must make one statement before I go on any further, for I believe it needs to be said as to clarify my intentions in writing the above headline. Let me first express my sincere apologies to weather-rock weathermen everywhere. At least you understand why the rock may, or may not, show signs for contemplation. The others have demonstrated far too many times by their own proclamations of analysis – they have no clue.

Let me put out another premise that should not be lost on anyone trying to figure out what they’ll both do in their business, as well as – with it. Because, unlike those of us that live and die by the decisions we need to make when it comes to pricing, inventories, labor, location, etc., etc. An economist not only is usually not on the same page as you or I. In most cases one can argue: they may not even be on the same planet.

“You know what the difference is between an Economist/Analyst and a Business-owner? When a Business-owner makes a prediction on his or her business and predicts wrong: The business as well as they could wind up in bankruptcy. When the Economist/Analyst makes a wrong prediction: They just make another prediction.”

So why the use of the proverbial “weather-rock” analogy you may be asking as it pertains to something so complex as the economy. Well, in many cases the economy is just as complex with just as many unknowns and misunderstood relationships as the weather. (Please, for the sake of this discussion refrain from interjecting any “climate change” arguments . Please! I’m begging you!!)

What was once a joke (e.g. the weather-rock) now seems to symbolize what today stands for “serious analysis” or “markers” as to base monetary policy decisions on. Today, forecasts of nearly any sort are adjusted more times as well as their initial direction of strength or lack of it making TV weatherman everywhere ask – “Dang! And they say we’re not reliable?”

Far worse, these predictions are made using data in every way that resembles the known use for proper analysis of the weather-rock. i.e., If it’s wet – it’s raining. If it’s cold – it’s cold outside. And as ridiculously obvious as the aforementioned example is. What seems lost on most economists (as well as the financial media as a whole) is that their version of a weather-rock is being manipulated as to be wet not from rain – but from someone dousing it with a garden hose or other source whenever needed.

Nevertheless – their resulting analysis would be the same: The rock (or data) is wet, therefore it must be raining.

It’s one thing for those who want to express their “brilliance” in professing this style of insight and/or analysis. We can pay attention, or not. It’s a far different thing when monetary policy that will affect not only your business or personal finances – but quite possibly the sovereignty of the monetary system as a whole I’ll argue – is quite another.

Today, the world of Ivory Towered Economists (ITE) and their prognostications have taken on an aire in quite the opposite direction as well as tone of what we’ve now come to expect when watching a local or even national weather broadcast. If a typhoon, monsoon, hurricane, you name it, is somewhere visible on the planet, whether it’s reached land or is 2000 miles out at sea. A diagnosis and analysis of the impending potential havoc will be strewn across your preferred media consumption device in a never-ending cycle of breaking news alerts with more force and rapidity; than the actual wind speeds of the rotating storm front itself.

As much as we may laud or laugh at the coverage, the fact is – at least there is a case to be made for the potential of such predictions coming to fruition. i.e., there is an actual visible storm. On the other hand, the ITE acknowledge more often than advisable prudence would allow for, that there is no need for concern. For after all – the “rock” is not wet. All in a reticent tone implying: No need to worry – “They’ve got your back.”

Then it’s up to you as to infer exactly “who’s” back do they indeed have? Yours? Or the banks and insurance companies? And if it’s the latter – does that translate into help for you after any such storm clears? If you want any clues on how much help the latter may provide – just ask anyone still trying to put their lives and homes together since Hurricane Sandy in 2012. Same goes for anyone trying to prudently protect their savings after the 2008 financial crisis.

The issue at hand is: far more people have discovered whether by chance or direct analysis of their own, both the Fed., as well as their gaggle of cohorts throughout academia, as well as in the financial media, are all watching and gaining their clues – from the same “rock.” Furthermore: It’s now self-evident to anyone willing to look. It’s not to see if the rock is wet, dry, or anything else. It’s to make the rock wet, dry, or anything else needed for the narrative. Because today; narrative trumps reality in today’s economic disciplines. For “Fake it till you make it” seems to have become the most dangerous expression of monetary policy group think the world has ever known.

GDP numbers not what you would like? (i.e., the rock is dry) Simply allow for some “double seasonally adjusted” garden hose operator to make it so. “Jobs” numbers showing too much, or too little, conflicting the narrative of why, or why not, raise rates? No problem. Put a hairdryer on it today, and the garden hose tomorrow. After all, wet is wet, and dry is dry, regardless of how, right? Caught in a quagmire of trying to fend off accusations that the rock is clearly visible? Again, no problem. Order up a fog machine and take to the podiums and pronounce: The data is a little murky. We’ll have to just wait and see. After all, who could argue with holding off any policy adjustments without clear visibility, correct?

As ludicrous as the above sounds. If one truly looks at just how the articulated views from both the Fed. as well as most other economists. I would venture to say it’s not that far removed as they would like one to think. And there’s also one other small truth that looms quite large in the annuls of their predicting prowess. Just like the weather-rock, the damaging effects as well as the outright disastrous implications are unseen by this crowd until the actual catastrophe is upon them.

One would have thought being in an Ivory Tower might have supplied a better advantage or viewpoint. Oh well!

© 2015 Mark St.Cyr