Is the Stock Market a Giant Gamble?

RATS!!!! THE STOCK MARKET!!!!

Full piece: https://kyla.substack.com/p/the-federal-reserves-wager?justPublished=true

00:00 - Intro
00:57 - The Markets
01:31 - An Interruption
04:02 - Pascal’s Wager
05:19 - Fed’s Wager
10:12 - The Job Market
12:37 - The Bond Market
14:05 - Oil Market
17:26 - Final Thoughts

Throughout this video I say tapering when I really should be saying tightening.

As a quick note, tapering are things that modify central bank activities (reduction of the balance sheet, which the Fed is already doing) and tightening is an actual course of action (raising rates). Both imply contractionary monetary policy, so they often get conflated in the media.

So the big question is when will the Fed tighten - and in order to tighten, they have to weight maximum employment and price stability. And then that question becomes - which one of these is more impactful? Maximum employment? Or price stability and dampening inflation?

so that’s why the outcome matrix is so important - the Fed has to decide if they want to weight inflation more than a weak jobs market. What are some potential outcomes?

The Good:
If inflation/maximum employment DOES exist and the Fed DOES tighten: that’s good!!! Just saved the economy from going into maximum overdrive mode, heck yeah

If inflation/maximum employment DOESN’T exist and the Fed DOESN’T tighten: this is also good!!! We avoided doing things that are bad, high fives all around

The Not-so-Good:
If inflation/maximum employment DOES exist, and the Fed DOESN’T tighten: okay this is probably bad!! The economy could get real spicy, real fast, and prices could rocket!

If inflation/maximum employment DOESN’T exist and the Fed DOES tighten: Okay yikes!!! Probably a Recession

So if the Fed has to decide - do they wait for jobs to get where they want them to? Do they wait for inflation (which is now being fear mongered by absolutely everyone (and for potentially reasonable reasons))??

WE CANNOT HAVE GREEN ENERGY POLICY WITHOUT GREEN ENERGY INVESTMENT

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Music by Pick Patek - My Mind Is A Barrel (feat. Raindrop Relly & Charles Hussle) - https://thmatc.co/?l=B6CED606​​​

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