Why does the Fed want the stock market selloff (5 May 2022)?

I will provide you 2 answers; the textbook financial professional BS and then the answer that reflects reality.

Professional answer: the fed is concerned about the high inflation that is occurring and the primary tools that they have to fight inflation are raising the Fed Funds rate and their ability to sell assets from their balance sheet which results in longer term rates rising. They are hoping to get inflation under control with minimal damage to the overall economy.

Now the reality of the situation:

The FED cares about 2 things in this very specific order of importance: The Feds own credibility, and second , the welfare of its only client, the US Goverment, specifically its treasury department.

It’s credibility will always remain number 1 because that’s what allows them to be the only entity in the world that can print the world’s reserve currency.

The welfare of the US Treasury is the very close 2nd goal because without it doing well, the Fed will suffer and lose its powers and abilities.

With that said, understand that they do not give 2 whips about you, the market, housing, or whatever else the media tells you. They want to make sure that the treasury doesn’t default and can service its debts. Ask yourself, is the treasury more able to service its debt with high inflation or in a deflationary environment?

The answer is that the fed wants, and now needs runaway inflation so the US debt can be paid off

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