We give too much importance to the Fed. If you follow my writings, you know this is not the first time I say so.
The above graph shows the growth of government spending and the money supply M2 (click to enlarge). The correlation is striking. What is the point?
The Fed prints enough money to finance government spending. No more. No less. Their most important function is to regulate the financial system. And you know how successful they have been in anticipating the latest financial debacle.
My point is that we make too much of what the Fed can do.
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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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