The Fed is Walking on a Tightrope

About ten years ago I remember watching a daredevil attempt a stunt to walk the tightrope over the Grand Canyon. He had a camera on him with a live feed that showed how far down the rope was suspended over the bottom of the Grand Canyon. What really increased the anxiety watching this event was the wind picking up when he was in the middle of the line. You could see his shirt and even his pants whipping in the wind.

The Fed is walking a different tight rope so to speak…

The FOMC meeting at the end of January gave the impression that the Fed is now ready to pivot from raising interest rates to lowering them sometime this year.

Then earlier this week the Chairman of the Federal Reserve, Jerome Powell, was brave enough to go on “60 Minutes”.

It gave us some insight into the minds of those on the Federal Reserve board and where they are going and what they are concerned about.

The major issue that was discussed is if they stop raising rates, inflation could still run rampant in our country, however if they lower rates that is a major market indicator that has come before every market crash and recession or in other words major asset deflation.

In the interview when asked what keeps Jerome Powell awake at night…

The answer was, the National Debt. Chairman Powell stated that “the U.S. The government is on an unsustainable fiscal path” or in other words the debt is growing faster than the economy.

It was mentioned that in 30 years from now the National Debt is projected to be $144 Trillion dollars or in other words $1M per household.

Based on the chart above I thought that our current status of $198,085 of debt per household was bad. Like Jerome said…“we are borrowing from future generations.”

My intention with this message is not to put the national and global pressures squarely on your shoulders, but I do want to urge you to be vigilant as you are looking at your savings and investments.

If you need some help evaluating your specific situation and how you are going to handle whatever the Fed throws at you, reach out and try to find some time with someone on our team.

Until then…please don’t try to walk on a tight rope (unless it’s in your backyard only 2 feet from the ground, ha ha.)