In this article, I reveal the dark connection between the Fed, the media, and the misinformation that rolls around our lives.
It's all about a narrative they push to make you understand and live your life as they describe it. The Fed wants you to believe they have power, the media tells you that, and when people like me, tell you the actual truth, they call it misinformation.
I will explain how all of this works and why.
Do you want to take your investing to the next level? Check out my new Online Investing Forum! I have partnered with Lyn Alden and Chris MacIntosh to bring you the BEST Investment Tool on the Internet Today – Rebel Capitalist Pro! Check out our 7-Day Trial Membership Promo for only $1! Visit GeorgeGammon.com/pro.
For more content that'll help you build wealth and thrive in a world of out of control central banks and big governments, JOIN our Daily Newsletter.
The Fed Has No Clothes
I'm going to reveal the connection between The Fed, the media, and misinformation.
Let's start with this statement: The Fed has no clothes. The sooner you realize this the better you're going to be. Let's go into a couple of charts.
First, a very familiar one, the Fed's BS.
It starts in 2004 and goes all the way to 2020, and on the left, it goes from 1 trillion up to 8 trillion.
It began very steadily until we got to the GFC, where quantitative easing one happened, the balance sheet went parabolic straight up over $2 trillion.
By 2014, the balance sheet was over $4.5 trillion, and you all know what's happened with the coronavirus, so it went parabolic once again over $7 trillion.
But let's remember this entire time the Fed has had a target of a 2% inflation rate. What we're always led to believe is that the Fed is completely powerful, that they can control anything.
They have the Fed put, they can “support the market”, create inflation, and lower or raise unemployment.
They can do anything they want just by going out there and using all of the tools they have in their bag, that's what I'm really trying to get at here.
But let's look at what actually happened with inflation since they took their balance sheet up to over $2 trillion, $4 trillion, and now up over $7 trillion.
Here is the second chart.
Same as the last one, it starts in 2004 and goes over to 2020, on the left it goes from -4% up to 6%. This of course is the CPI, meaning inflation the way they measure it.
But I would challenge you to look at this chart of the CPI and the Fed's balance sheet and find any correlation whatsoever.
In fact, if we draw a line it's not completely accurate.
But from 2008 to 2009 or so I drew a line directly through the 2% target rate so you can see that for the majority of that time, over a decade, inflation was under their 2% target.
I know the CPI isn't an accurate reflection of the real rate of inflation but when we're looking at the results and whether they achieve them or not, we have to use their own measuring stick.
And again, if you look at their 2% target rate and what they actually achieved, they were in their own “No bueno zone” almost the entire time.
If they're that good, if they could just whip up inflation anytime they want, Jerome Powell would come out and say: “Don't you worry guys over the market, we're going to let the inflation rate run hot. We're going to let it go over 2%, we're going to have a 2% average, just you wait and see.”
Why should we believe anything Jerome Powell says about inflation when they've never been able to produce inflation using their own measurement in the past? It just doesn't make sense.
The emperor has no clothes and the sooner you realize that, the better.
We always hear about the Fed having all of these “tools” but we have to realize they only have one trick up their sleeve, and that's creating additional bank reserves.
Let's check out what I'm referring to.
I have a diagram of how the Fed used to manipulate interest rates prior to the GFC, back in 2008, and even the effectiveness of this system was debatable.
Here you see two balance sheets, the Feds and one of the commercial banking system.
If we start with the assets and liabilities of the commercial banking system there are treasuries and reserves, and remember, these banks are lending to each other overnight.
That's what the Fed funds rate is trying to target. The Fed has treasuries as assets on its balance sheet and these bank reserves, which are assets of the commercial banking system, are actually liabilities of the Fed.
That's the only trick up their sleeve: Creating or destroying bank reserves.
Let's take it another step. We'll say right now that the interest rate of the Fed funds is 5% and the Fed wants to lower rates.
Prior to 2008, according to the textbook, the way they did this was buying treasuries from the commercial banking system.
They would create more bank reserves, and therefore if there were more bank reserves that they could lend to each other overnight, the interest rate would go down.
The Fed would have those treasuries as an asset and those additional reserves that had been created would be liabilities on their balance sheet. At the end of the day, this is really all they can do.
To back up exactly what I've described, let's take a look at the Fed's website.
They start by describing how this process worked prior to 2008, which is exactly what I just described up on the whiteboard. It's very important that we emphasize prior to 2008.
According to the Fed's Website:
The Fed uses its monetary policy tools to influence the supply of money and credit in the economy. It does this primarily by using daily open market operations. When the Fed buys or sells U.S. government securities, it increases or decreases the level of supply of bank reserves in the banking system.
Here you can see their fancy supply and demand chart and how it used to affect interest rates: The supply of reserves increases and those interest rates go down.
But again, the point I'm trying to emphasize is the only tool they have is creating or destroying bank reserves.
Now, let's move on to the Fed's new monetary policy “tools”. You would think they would come up with something new and innovative, but whether it's IOR, which is interest on reserves, or RRP which is reverse repurchase agreements.
Still, the only way they execute these transactions is by… You guessed it! Using bank reserves. They have another chart that shows how this works.
Since 2008 or quantitative easing, the banking system has been flushed with reserves so the natural interest rate would go down to zero and it wouldn't move.
The only way that they can get the interest rate above zero is through IOER or IOR and RRP, and this is basically just paying the banks a rate of interest to hold their reserves with the Fed.
But what are they paying the banks with? Of course, bank reserves.
It all goes back to the same thing and the only tool the Fed has at their disposal, I'll say it one more time, is the creation or the destruction of bank reserves. That's it.
All of these “tools” we think the Fed has, whether it's IOER, quantitative easing, or inserting themselves into the repo market it all goes back to the same thing, just creating more bank reserves.
How can we expect them to manage the rate of unemployment?
In Europe they've gone so far as to expect the Central Bank, the ECB to micromanage climate change.
When you look at one of the congressional hearings, they have Jerome Powell, Janet Yellen, Ben Bernanke, and these crazy politicians that ask them how they're going to eradicate poverty or raise the minimum wage.
It just won't work, it's complete insanity!
At the end of the day, they're a one-trick pony. We've put all our confidence into this Fed that's all-powerful, that can just wave a magic wand and do whatever they want.
But when we look at the data I have shown you, it becomes obvious that the Fed actually has very little power, if any power at all.
The only thing they can really do is affect psychology. They play a game with the markets where they try to manipulate them with perception to get the market participants to do their bidding.
I listened to a fantastic podcast with my good buddies Emil Kalinowski, Jeff Snider, and Brent Johnson.
In it, they use an analogy of a bucket. The water goes into the bucket, meaning bank reserves… But how do those reserves and the liquidity get out of the bucket into the real economy to create inflation?
I'd like to use the bucket to illustrate my own type of analogy. Let's assume we have a bucket right in front of us and it's absolutely infinite.
It's the buzz lightyear to infinity and beyond bucket. The only thing the Fed can do is fill it with water, that's it. That's it.
If that water needs to seep out of the bucket to create inflation or additional broad money in the real economy chasing goods and services, the Fed needs a market participant. Banks or the people borrowing money to actually poke a hole in the bucket to let that water out.
You see, that's what we need to understand. We have this bucket and the only thing the Fed can do is fill it with water, and that, theoretically doesn't do anything because that water never gets out into the real economy.
They need market participants to poke those holes in the bucket to let the water out and that's where psychology comes into play.
That's why I think you'll see the Fed with their language get more and more extreme when they're not able to achieve these objectives such as inflation moving forward.
Jerome Powell comes out and says, “Okay guys, you better get ready because we're going to let inflation run hot.”
When that doesn't work… What are they going to do?
The only thing they can do is create more bank reserves, and that's the definition of insanity: Doing the same thing over and over again expecting different results.
The only thing they're going to be able to do is jaw-bone the market, and try to make you believe that the Fed can produce all of this scary inflation.
This by saying “Okay, now we're going to not only let it go to 2%, we're going to let it go to 10% or 15%.”
But sooner or later the market is going to realize that the emperor, or the Fed, has no clothes. The only thing they have is psychology perception and manipulation.
The Media's Dark Secrets
I'm going to expose this right here and it starts with understanding who and what influences the content.
We all know that the big media companies and networks have a very specific target audience they're trying to appeal to. Whether it's CNN or Fox News.
But to really understand how the media operates we need to dig even deeper, and this takes us directly to the ownership and who is providing the funding.
I had a shocking interview with industry insider and veteran, Rick Sanchez, on how this whole system operates. This is really going to open your eyes. Take a look at this short transcript.
Rick Sanchez: Somewhere along the line journalistic entities, major newspapers, television stations at the local level networks were owned by people whose business was journalism.
In other words, the guy who owned your local newspaper in Wichita was a guy who grew up in a family where he essentially had his great-grandfather bought the newspaper, started the newspaper, and that was their business.
Somewhere along the line, the journalistic business model became completely corporatized.
Suddenly the people who own journalism are the people who journalists are supposed to be going after. The people who we should question.
I'll give you a perfect example. When I was first hired at NBC, and I got up there when 9/11 happened, I remember I was there, I was one of the only reporters actually reporting live on that day.
I remember immediately after we went back and I was talking to Lester Holt, who was my buddy back then who is now the main anchor at NBC.
He and I remember once looked at each other and said, “What the hell is going on here? Why are we being encouraged to push this war on Iraq when Iraq did not attack us?”
We were attacked obviously by factions inside Afghanistan.
Then we realized at the time that we were working for General Electric, which was the company that was going to make the most amount of money from the war in Iraq because they were weapons manufacturers who happened to also own MSNBC.
What we're seeing now in the journalism industry is that type of interlocking connection.
Between people who sit on the boards of NBC, CNN, Fox News, New York Times, who have interests in telling certain stories and having certain stories not told by these people who they pay very well, by the way, millions of dollars to be the circus show of what's going on in the world.
That in and of itself makes it difficult than for that journalist who, by the way, has four kids and a wife or a husband.
They're making $3,$4, $6 million being one of the faces of one of these networks and all they have to do is look the other way when the United States invaded Honduras, which is not good for the consumers of news.
This is why suddenly the opening comes along and people like George Gammon are suddenly very popular on YouTube.
Because people are going, “Wait a minute, if I watch CNN or Fox or these other guys, I get very establishment content which I know has its limits and can't go outside the box.
If I watch this guy, he doesn't have those parameters so he's allowed to tell me things. He may be full of crap too but somehow I kind of want to trust this guy a little more.
I think he may have more credibility than those guys. But wait a minute, those guys are sitting in Walter Cronkite's chair, what happened? “
Well, it happened. Suddenly George Gammon has more in common in Walter Cronkite than the guys who are sitting in the chairs that Walter Cronkite used to occupy.
(End Of Transcript)
You see what's happening. Often, these news entities solely exist to further the agenda of whoever owns the news corporation or whoever is giving them the funding. What ends up happening is the stories or the news is actually created, it's not reported.
How this would work is they come into the office on Monday morning and they decide, “Okay, guys, we need to create these stories so go out there and try to get any “facts” that you can to build this particular story to further this agenda or this narrative.”
And with the BBC, you know exactly what I'm talking about. We get to a point where the only thing that matters is narrative, facts are completely irrelevant. A great example of this recently is a BBC show.
They used my YouTube channel as an example of misinformation on the internet. They say: “You really need to look out for because if you watch these channels like George Gammon's, you're really going to be taken down a path, this rabbit hole, and he's going to manipulate you into doing things that you otherwise wouldn't do.”
Talk about the pot calling the kettle black.
The easiest way to determine who's trying to manipulate you and who's trying to just inform you is ask yourself the question, “Who is using facts and who is just sticking to a narrative and ignoring facts all together?”
There was a whiteboard video that I did, that the BBC used as misinformation. It may come as no surprise that it was a whiteboard video on the World Economic Forum's Great Reset.
Then you'd have to ask the question, “I wonder how the BBC is actually getting their funding when there's this huge move in the UK to defund the BBC?”
I'm not throwing out any conspiracy theories but it does make you wonder if the World Economic Forum themselves are funding the BBC, but let's not go down that rabbit hole let's stick with the facts.
The facts that I used in that whiteboard video were directly from the World Economic Forum's website.
They focused on step number one when I outlined their agenda, the World Economic Forum's agenda for a Great Reset that's triggered by this fourth industrial revolution.
Their words, not mine. What this perfectly illustrates is there's a very specific narrative that each news outlet is trying to push.
They form this narrative by not reporting the news but actually fabricating and creating the news themselves.
They totally ignore facts and the only thing they report is “news” are things that fit their specific narrative. And if it falls outside of their narrative, they categorize it as misinformation.
Of course, the irony is, the biggest proponents of this misinformation are the media outlets themselves.
Who are sitting pointing the finger at everyone else while at the same time they're only doing the bidding of the owners, or the people, entities, that are giving them their funding.
How does this media game play into what the Fed is doing?
The media pushes that there's a Fed put, that they can support the market or easily create inflation. Just turn on CNBC or Bloomberg sometimes.
Well, why would the owners of these media outlets want that narrative pushed further and further?
Well, if there's a Fed put and everyone believes that there is, therefore when the Fed comes in and does quantitative easing the stock market goes up.
That's going to benefit the ownership in the sense that their share price is going to go through the roof.
I could go down the list of things that they would benefit from by the general public and the marketplace believing those things about the Fed to be true without actually looking at the underlying data. To see that again, the Fed or the emperor has no clothes.
My prediction is that as the Fed's impotence is further displayed to the marketplace over the next years, the narrative with the media they're going to push is going to get worse and it's going to get even more exaggerated.
That's not just with the Fed but that's also going to be with the divisiveness that we're seeing in the world today.
I think at the end of the day what you have to ask yourself when you're watching a specific news outlet is:
Who actually benefits from the narrative they're trying to push?
A great example of this is Bezos buying The Washington Post.
I'm not saying anything good or bad about Bezos, but why on earth would someone like that be motivated to buy an organization that's declining substantially in revenue and we all know that at a certain point they're going to become obsolete?
The answer to the question is, of course, they don't care about profit or revenue, the only thing they care about is influence and manipulation.
It takes us right to a media doom vortex that I drew on the board.
This applies to the Fed as well. It starts with their incentives, and their incentives go right into how they are trying to manipulate the public, just like you and me.
The more they can manipulate the public the more they're brainwashed into doing their bidding, whether it's the media or the Fed.
The more this brainwashing works the more they're incentivized to continue to further their narrative to whatever they want to persuade you to do like buy the dip, start a riot, or support a war, possibly even a civil war.
What Can You Do?
What can you do to solve this problem of media and Fed manipulation?
We have to remember that the only power the Federal Reserve has is that you believe they actually matter. The only power the media has is that you still watch.
The solution to the problem is actually quite simple. In fact, you have the power over the Fed, you have the power over the media.
The only thing you need to do is pick up that remote control and simply turn them off.