1. By www.ProfitableInvestingTips.com

2. All sorts of interesting ideas pop up
during a presidential campaign.

3. This year one of the ideas floated by
candidate Trump is that the Fed has
created a false
economy. CNN reports the story.

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5. Now Trump is blaming the Fed for
creating a “false economy” with its
emphasis on extremely low interest
rates.

6. “They’re keeping rates down because
they don’t want everything else to go
down,” the Republican presidential
nominee told Reuters on Monday.

7. Trump said the “only thing that is
strong is the artificial stock market.”

8. It’s the latest example of Trump
doubting the bull market in stocks and
criticizing the Federal Reserve, an
institution that tries hard to avoid being
seen as having political motivations.

9. “We have a very false economy,” Trump
told Reuters.

10. “At some point the rates are going to
have to change.”

11. What the heck does this mean and if
there is a so-called false economy
how does that affect investing?

12. The Washington Post weights in on
the issue with an article arguing
that there is no false economy.

13. Much of what Donald Trump says about
the economy has little relationship to
reality.

14. For example, his oft-repeated claims that
the nation’s real unemployment rate is
40 percent, that 100 million people are
looking for work or that he’s going to
bring back all the jobs that have gone
overseas are pure falsehoods.

15. Then there’s the stuff that’s more
incoherent than fact abuse, such as his
recent statement that “we have a very
false economy.”

16. I think what he’s saying here is that the
real economy – gross domestic product,
incomes, jobs – is pumped up by
accommodative monetary policy, and
that if the Fed pulled out the rug, i.e.,
raised rates, which he apparently wants
it to do, these variables would tank.

17. Why tank the economy, you might ask?
Beats me; that goal makes about as much
sense as Trump’s repeated flip-flopping
on this rate-hike issue, which he was on
the other side of in May after originally
embracing his current position in
November.

18. There are purists who believe in a
laissez-faire economy which is a
policy or attitude of letting things
take their own course, without
interfering.

19. Over the long haul people who think
they can make more money in an
unregulated market argue for one
and those who are hurt by dirty
dealing in an unregulated market
argue for controls.

20. Regarding the Federal Reserve, they
are tasked with the following
according to the web site of
the Federal Reserve System.

21. [The Fed] was created by the Congress to
provide the nation with a safer, more
flexible, and more stable monetary and
financial system.

22. The Federal Reserve was created on
December 23, 1913, when President
Woodrow Wilson signed the Federal
Reserve Act into law.

23. Today, the Federal Reserve’s
responsibilities fall into four general
areas.

24.  Conducting the nation’s monetary policy
by influencing money and credit
conditions in the economy in pursuit of
full employment and stable prices.

25.  Supervising and regulating banks and
other important financial institutions to
ensure the safety and soundness of the
nation’s banking and financial system
and to protect the credit rights of
consumers.

26.  Maintaining the stability of the financial
system and containing systemic risk that
may arise in financial markets.

27.  Providing certain financial services to
the U.S. government, U.S. financial
institutions, and foreign official
institutions, and playing a major role in
operating and overseeing the nation’s
payments systems.

28. Because the Fed’s actions strongly
influence the economy, investors are
wise to pay attention.

29. The Fed has been in existence for
more than a century and gets credit
for pulling the nation back from the
brink of economic disaster after the
Great Recession.

30. This is the world that we investors
live in so calling the system false is
typically incorrect and usually self-
serving.