About the Fed…

They announced today that they taking actions to keep more water in Lake Powell to preserve the Dam’s ability to generate power. Currently, the reservoir is only 33 feet above the “no power zone”. Part of the plan calls for more water to be released from Flaming Gorge, which flows the length of Utah into Lake Powell. This historic action will keep the lights on in the homes of 5.8 million Americans who are the beneficiaries of the electricity produced by the Glen Canyon Dam. Slowing water out of the dam is the second half of the equation. Lake Mead was heard to say, “wait, what”?

You can’t please everyone, ever.  The Bureau of Reclamation deals with it today over the Colorado River; the Open Market Committee gets to deal with it tomorrow over their interest rate decision.  It’s most likely that Feds’ll raise 1/2%, tomorrow at noon our time, but it may be a 3/4% hike.  Like utilizing dams to capture water, harness its power, and release it without wiping out downstream civilizations, the Fed manages a Lake Mead sized balance sheet and controls borrowing costs in attempts regulate the economic greater good of the entire U.S. population. 

It’s tricky.  I wouldn’t want that job.  It’s impossible to be all things to all people.  The Fed has spent the last 14 years damming up their portfolio and amassing 10X the assets they had in 2008, which currently stands at $8.95 trillion.  They have been buying funds of all shapes and sizes to keep the velocity of money moving in a controlled manner down through the remainder of the canyon.  Just releasing the plans to open up the floodgates has caused long term interest rates to rise 75% in the last four months.  The deluge of payment shock is crushing the have-nots.  But the current direction taken by Chair Powell et al. seems to be a prudent step if only to have the ability to relax the policy again in a few months should the move be too drastic.

Maybe the Feds should pool their resources and buy $8,000,000,000,000 worth of water.  Ok, hear me out.  The above plan will keep 1,000,000 acre feet of water in Lake Powell in 2022.  A pallet of water bottles at Costco has 253.5 gallons and costs $439.99.  It would take 1,285.4 pallets to amass one acre foot of water at a cost of $565,566.  So just do that a million times and you’ve filled up Lake Powell for the year and reduced the balance sheet by $5.6 trillion.  Geez, this running the country stuff is easy. maybe I should be in the public sector. The ONLY logistical problem I see (because there can’t be any others) is now you’d have 2.5 trillion empty water bottles to try to recycle.  Dang, this is hard indeed.  Well, good luck tomorrow Jerome.