Why You Should Ignore the Fed Chair

Transcript

Ken Fisher:

So, I mostly don't like to talk about things everybody else talks about. I mostly think the market takes care of that for me. Every Thanksgiving, I thank the world for worrying about all kinds of things so I don't have to. Markets price everybody's worries, and everything that everybody's worrying about I know has been digested in the marketplace, and it's better for me to focus my efforts, my thoughts and my worries elsewhere.

On the other hand, people can't stop talking. It's just inherent to the human beast. We're a little bit like monkeys in the jungle that once we start going, we got to keep going for a while. Now, the fact of the matter is that with the confirmation of new Fed Chair Warsh, there's a lot of speculation about how he'll be, what he'll do, how things will go, and people ask me what I think about that and how I see it. And you know what I do? I ignore it, and I think you should too. This is so talked about, so focused [on].

I'll tell you a few things about Kevin Warsh, but I don't think it's— it's almost always a mistake to focus too much on the head of the Fed, even though most of the world can't stop doing it. Because they can't stop doing it, it's priced. The head of the Fed is usually someone who's got genuine bona fides to be in that position, and he does. It's usually someone that's seen as favorable to the president because the president picks him, and the Senate confirms him.

And then that person has to deal with the rest of the committee. Those people all have their own views. He has to be a consensus builder. And, as I have often said, most of these people are not really thinking about the world correctly. They mostly come from what I consider to be a wrongheaded view of how monetary reality works. And therefore, they try to do things that they're not really able. And as Milton Friedman, when I was young, characterized them once —and I thought very well at the time— a little bit like children at bumper cars at the amusement park, unable to restrain themselves from too much activity.

I don't know that I would have a reason to think of this new Fed Chair, or any new Fed Chair, as particularly different than that. Now, let me make a point. Usually when we have a new Fed Chair, markets are initially nervous about him or her. I say "him or her." We've had one "her." Usually "him." That'll be the case with this "him." That's why all the talk. That's why all the, "woo-woo-woo." On the other hand, after a little bit of time—and it's not very long— markets usually come to think the head of the Fed is a holy savior. And, boy oh boy, we better not lose him. And they tend to align with him in their thinking.

Now, in the most recent one with Chairman Powell, the president was very hostile attacking Chairman Powell, and so that got some other people of the same view. But, in my adult life, I've pretty much always been openly a critic of the central bank, and not just ours, but all the major central banks that try to engage in trying to control the economy by wiggling interest rates, which they're really not able to do. They think they are, but they're not. They make more mistakes than they make right movements. They could be replaced by an AI bot, really easily and more effectively. That's a whole different topic.

The fact is, I think you're best off focusing on things, A: that everyone else doesn't. And presuming that this head of the Fed is probably going to go down that same pattern that almost all of them do, where there's initially concern and then embraced as some kind of a holy savior who is all knowing. They aren't, he won't be. And, the fact of the matter is, the excess focus on it is a function of us in our culture, not really understanding that the central bank cannot control the economy by wiggling interest rates.

Thank you so much. Thank you for listening. I hope you found this useful. A lot of what I said most people don't believe, but it is what I think. Thank you. Have a good day.

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