The mainstream financial media almost always make the Fed out to be a group of all-powerful market magicians. If the Fed Chairman and his associates can pull the appropriate financial levers and switches, they say, then the economy and markets will suddenly get better.
This characterization of the Fed's omnipotence isn't new. But is it accurate? For just one example, let's take a trip back to 1999.
If you recall, global markets had just traversed through a rough patch. The previous two years had seen a currency crisis in Thailand, the Asian financial crisis, the Russian financial crisis, and a downturn in U.S. stocks.
By early 1999, Greenspan was so worried about the markets that he lowered interest rates -- the "Greenspan Put."
Not long afterwards, Time Magazine affectionately hailed Greenspan and co. "the Committee to Save the World." The issue told readers "the inside story of how the Three Marketeers have prevented a global economic meltdown -- so far."
But did Greenspan really save the world and "prevent a global economic meltdown"?
This chart might provide a clue. It's from EWI Chief Market Analyst Steve Hochberg's new subscriber-exclusive video, "Three Historic Peaks in the Financial Markets -- and What It Means for You."
The black arrow shows you when the "Greenspan Put" began. As you can see, stocks did briefly rally after that moment -- but then the 2000-2003 bear market erased all the gains, and then some. Not to mention the fact that in the 12 years since that "world-saving" move by the Fed, the stock market has actually gone sideways in nominal terms, and down in terms of the Dow priced in ounces of gold.
Here's another example for you: In the 2008-2009 stock market crash, remember how the Fed kept lowering interest rates month after month and finally cut them to almost zero -- but the markets kept falling, anyway?
This is not to say that the Fed caused the markets' subsequent instability. The point is this: no one -- not Greenspan, Ben Bernanke, or anyone else in the Fed -- controls the markets with their interest rate or other policies.
The markets control the markets, and they ebb and flow with the tides of investor psychology. And according to the Elliott Wave Principle, mass psychology and the markets are patterned and, therefore, predictable (within a range of probabilities).
Right now, the markets are telling EWI Chief Market Analyst Steve Hochberg a fascinating story, and he gives you the full details in his new 42-minute subscriber-exclusive video, "Three Historic Peaks in the Financial Markets -- and What It Means for You."
In it, Steve gives you 40 eye-opening charts and an intensive look at the development of the greatest financial top of all time -- one that encompasses stocks, crude oil, commodities, gold, property prices, junk bonds and more. Here's what some of Steve's subscribers have said about it:
"Just a FANTASTIC presentation of the happenings in the markets. The different charts do depict a STORY, which one needs to be aware of. Thanks for the painstaking research carried out at EWI."
- Ashish M.
"This was the best overview of EWI's or anyone else's view of markets I have ever seen. I have been reading about markets for 20 years."
- Rick H.