The Fed Can't Force Outcomes That Market Forces Reject

Gold last traded at $1,737 an ounce. Silver at $26.81 an ounce.

NEWS SUMMARY: Precious metal prices rose Tuesday despite rising interest rates and a firmer dollar. U.S. stocks fell, giving back some of the strong gains from the previous session.

Tamny/Forbes---"Money moves around the world with a click of a mouse....Longtime Citibank CEO Walter Wriston explained money much better. He observed decades ago that 'Capital goes where it's welcome and stays where it is well treated.' That's why all those billions that Congress has sent to West Virginia over the decades haven't resulted in economic growth for the Mountain State....

Government spending quite simply cannot stimulate economic growth. Wealth redistributed isn't growth, and it isn't precisely because 'Capital goes where it's welcome and stays where it is well treated.' More specifically, capital goes to where there are talented people and talented people have for the most part been exiting West Virginia for decades. The Fed could quite literally helicopter tens of billions into West Virginia, its citizens could do what is unlikely whereby they would spend it all there, but the billions would still exit the state....

The Fed, like the government that created it, has no resources. In vainly attempting to centrally plan good times as though the 20th century never happened, it's not as though the Fed can pull capital from Pluto, or Jupiter, or from vaults at the New York Fed in lower Manhattan. Wealth is created, which means that the Fed can at best redistribute wealth already created in the private sector. Check out West Virginia to see how that's worked in the past....

Keyensianism doesn't work. What works is investment, and investment follows people. This blinding glimpse of the obvious has long eluded politicians eager to use redistribution as a growth tool, or eager to ask the Fed to plan it. If it worked, it already would have.

Which is why Powell's 'vows to support the labor market' are Grand Canyon empty. He can do no such thing. Jobs are a consequence of investment, and investment goes where it's treated best. Powell says 'We won't tighten monetary policy just because of a strong labor market,' but what he misses is that it doesn't matter what the Fed does. If investors don't agree with the Fed, they'll 'tighten' with a click of a mouse and there's nothing the Fed can do about it."