The Hollow Throne: Why the Federal Reserve Has Become a Dangerous Distraction

While the media chants its ritualistic Fed watch every time Jerome Powell twitches, America teeters on the edge of an economic superstorm. The tragic irony? The very institution that headlines claim “controls the economy” is either asleep at the wheel—or worse, knowingly driving off a cliff. Jim Rickards nailed it: the Federal Reserve is irrelevant... unless it’s actively making things worse. And right now, it is. Let’s get something straight. The idea that the Fed “guides the economy” is as outdated as the rotary phone. For all its supposed omnipotence, the Fed is playing with broken models, manipulating dead markets, and weaponizing illusion. It’s no longer a central bank—it’s a central mirage. The Great Monetary Mirage: When "Printing Money" Isn’t Printing Power In 2008, the Fed stopped being a bank and became a Potemkin village. It pretends to inject liquidity, but what actually happens? Primary dealers swap treasuries for cash, which then gets parked right back at the Fed as excess reserves. Nothing gets invested. Nothing gets built. No jobs. No growth. Just numbers on a screen. This isn’t capitalism. It’s monetary sterilization, a trick designed to pacify markets while preventing productive lending. The Fed pays interest on these reserves, rewarding Wall Street banks for not lending to the real economy. That’s not stimulus—it’s a high-yield parking lot. Meanwhile, the only meaningful money creation—M1—happens through commercial bank lending. And that faucet is being twisted shut. Lending has stalled. Mortgage demand is cratering. Credit card usage is slowing not because people are responsible, but because they’re broke. The consumer is tapped out. Business investment is flatlined. The blood is draining from the system, and the Fed is prescribing more leeches. Dead Models, Dead Ends: The Fed’s Economic Theology The Fed’s policymaking rests on models that have failed so many times they’d be criminal if used in engineering. Take the Phillips Curve, for instance—the sacred cow that claims inflation and unemployment move in opposite directions. It’s been disproven more times than alchemy. The 1970s? High inflation and high unemployment. The 2010s? Low inflation and low unemployment. In either case, the model didn’t predict a damn thing. Yet the Fed clings to it like a cult to prophecy. Then there’s the “term premium” myth. According to the Fed’s narrative, long-term interest rates are just a chain of short-term rates plus some mysterious “premium” the market throws in. In reality, long-term rates move on factors like liquidity, inflation expectations, and supply-demand imbalances. There’s no “premium” pixie dust. The Fed made it up to explain away markets doing the opposite of what its models predict. This is not science—it’s a priesthood. The Fed’s Zombie Market The very market the Fed targets with its policy rate—the federal funds market—hasn’t functioned since 2008. That’s right. The Fed sets a rate for a market that doesn’t even exist anymore. But that won’t stop Powell from preening in front of cameras every quarter like a wizard pretending the curtain is still drawn. Meanwhile, the real markets—the repo market (SOFR) and the Treasury bill market—are way ahead of the Fed. They’ve already priced in lower rates. The Fed isn’t leading the economy; it’s chasing the market like a dog chasing a car it can’t catch. And let’s not forget what those lower rates mean. They’re not a sign of health. They’re a funeral bell. Rates drop when the market smells recession—not growth. So when Trump demands lower rates thinking they’ll juice the economy, he’s asking for morphine on a dying patient. He’ll get his wish—and the economic collapse that comes with it. The Myth of Fed Independence: A Political Weapon in Disguise Rickards torches the lie of Fed “independence,” and he’s absolutely right. The idea that the Federal Reserve is some neutral technocratic institution is a grotesque fantasy. Since its inception in 1913, the Fed has been embedded within the political machinery of Washington. During WWII and the Korean War, it explicitly followed Treasury directives. FDR bent it. LBJ manhandled it. Nixon weaponized it. So spare us the performative outrage over Trump reshaping the Fed. Every president has done it. He’s just doing it more openly—and perhaps, more strategically. Let’s not ignore the elephant in the room either: Lisa Cook. She wasn’t appointed for economic brilliance. She was a DEI talking point, handpicked for optics. And now she’s under criminal investigation for mortgage fraud—misrepresenting residences to score lower interest rates. The Fed regulates the very banks she may have defrauded. Trump fired her “for cause,” and that’s not just legally sound—it’s ethical necessity. This isn’t about race or representation. It’s about credibility. If the Fed board can’t be trusted to follow the rules of the institutions they oversee, then the entire system is compromised. Her lawsuit to block her removal? Just more theatrics from an institution that’s lost its legitimacy. Control or Collapse? Trump’s Fed Reshuffle Is Too Late to Matter Yes, Trump is positioning to control the Fed board. With Stephen Miran stepping in, and Waller, Bowman, and others already on deck, the Fed could soon tilt Trump’s way. If Powell gets replaced in 2026, Trump will have effectively seized the Fed. That’s historic. But it’s also meaningless. The machine is broken. Trump could have seven loyalists on the board and it wouldn’t matter. The rates are falling because the economy is dying. The tools are dull, the engine’s seized up, and the Fed has no traction left. Even if Trump does capture the Fed, he’ll inherit a monetary corpse. The Real Threat Isn’t the Fed – It’s the Illusion That It Matters While the media obsesses over rate hikes and palace intrigue, the real collapse is unfolding quietly in the trenches of the American economy. Productivity is falling. Labor participation is shrinking. Real wages are flatlining. Small businesses are vanishing under the weight of regulatory nonsense. And the only thing the Fed knows how to do is print, pause, and pray. Rickards was right to call the Fed irrelevant. But we’ll go one step further. The Fed is the curtain that hides the real puppet masters. The Davos elite, Wall Street cronies, ESG cartels, and globalist technocrats all benefit from keeping the illusion alive. As long as you think Powell is in charge, you’re not asking who really profits from your economic servitude. This is not a monetary system. It’s a shell game. And it’s coming apart. Conclusion: Prepare for the Fed’s Final Act The storm is no longer on the horizon. It’s here. And the Fed, once thought to be the lighthouse of global finance, is just another broken light on a sinking ship. Whether Trump takes the helm or not, the iceberg has already been hit. The only question now is: Will you go down with it, or will you wake up in time?

The Hollow Throne: Why the Federal Reserve Has Become a Dangerous Distraction

Bill Brocius Sep 15

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