What daVinci's Failed Experiment Can Teach Us About The Fed [View Online]()|[Unsubscribe]( [Street Authority Daily] -[]Recommended Link Sponsored Content [Have You Seen this New Type of "Retirement Calculator?"]( There's a new type of "retirement calculator" that's changing the way thousands of Americans invest. Employees at some of the richest money management firms on the planet are using this calculator, including big Wall Street banks like Bank of America, US Bank, Wells Fargo, Wachovia, Morgan Stanley, and UBS. It has been featured on Fox News, CNBC and Fox Business. [Click here to watch the demo.]( August 11, 2021 What daVinci's Failed Experiment Can Teach Us About The Fed By Amber Hestla As I thought about the Federal Reserve this week, I realized they are trying to replicate one of Leonardo da Vinci's designs. Like many inventors throughout history, da Vinci tried to design a perpetual motion machine. This kind of machine would run forever without needing an external energy source. In technical terms, its operating efficiency would be greater than one. The designs were eloquent.
Source: [Museo Galileo]( Here's a description of da Vinci's most advanced design: "...a device combining four circuits, each made up of three straight paths and three curved path displaced by 120 degrees. Each circuit has two spheres that move from the side of the direction of rotation towards the outer rim and from the passive side towards the center. Mounting four of these elements on the same axis results in a rotary system with a sphere falling every 30 degrees of rotation, thus producing a series of pulses which it was thought would create the necessary overbalance to generate rotation."
Source: [Museo Galileo]( -[]Recommended Link [Want Triple-Digit Returns? You'll Need to Read This]( This simple strategy behind Velocity Trader is designed to deliver shot after shot at triple-digit gains. And the odd âtwistâ behind these trades allows investors to risk far less cash for the chance âamplifyâ their returns⦠This system singles out 2 brand new âtriple-digit trading opportunitiesâ and delivers them to one select group of investors, every single week. [Get all the details here.]( Perpetual motion machines don't work because they violate the laws of physics. These laws weren't understood when da Vinci lived, so he can be forgiven for pursuing the impossible. But the laws of physics do mean that we cannot generate energy from nothing. Or, as economists might say, there is no such thing as a free lunch. [See also: [Why The Fed (And Analysts) Are In Uncharted Territory](] How This Applies To Us Fed policy seems to be ignoring these laws. Current policy seems to be based on the idea that printing money and holding interest rates near zero will maximize employment while inflation will be wished away. One reason perpetual motion machines can't work is because there are frictions in the system. The balls in da Vinci's machine would eventually completely disappear as friction erodes its surface to nothing. In the economy, frictions include supply chains that can't keep up demand or workers who gain power as an economic expansion continues. These obvious frictions generate inflationary pressures as they reduce the efficiency of the economy. The Fed is maintaining its "easy money" policies as unemployment drops below its long-term average. Last week's unemployment report showed unemployment fell to 5.4% in July. This is below the 50-year moving average of 6.27% and below the 10-year moving average of 5.92%. While unemployment was low before the pandemic-induced recession, the benchmark should be the long-term average rather than 50-year lows. Using the correct comparison, we see that the economic recovery is better than average and the Fed should consider tightening its policy soon. Unfortunately, the Fed is unlikely to reverse course quickly. There is abundant political pressure to maintain low rates so that Congress can borrow as much money as it wants to spend. And the Fed is not immune to politics. Fed Chair Jerome Powell's term ends in February, and it's likely a second term depends on an accommodative monetary policy. Over the centuries, many inventors have claimed to develop perpetual motion machines. But in time, the laws of physics caught up to them. In a similar way, the Fed is trying to create perpetual gains in the economy with its policies... but in time, the laws of economics will catch up with them too. That's a long-term worry. In the short run, we focus on our indicators. My Income Trader Volatility (ITV) indicator remains bullish, as shown in the bottom panel of the SPDR S&P 500 ETF (NYSE: SPY) chart below. My ITV indicator is similar to VIX in that it rises as prices fall. Its current position, with the ITV indicator (red) just below its moving average (blue), points to potential strength in stocks. Our last chart this week shows my Profit Amplifier Momentum (PAM), which is also bullish. PAM is designed as a short-term indicator. The red bars are bearish, and the green bars are bullish. Its recent uptrend (marked by the change from red bars to green) is a potential indicator of strength. An "up" move appears to be the most likely trend in the short term, for now. And that's good news for us, because my team and I have just exposed a legal "loophole" that anyone can start using TODAY to collect on-demand income - in as little as 6 minutes... 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(Without this âsecret partner, Starlink will never get off the groundâ¦) [Click here now for exact details.]( To ensure that you receive these emails, [please add us to your address book.]( Disclosure: StreetAuthority doesn't own shares of any securities mentioned in this article. Members of our staff are restricted from buying or selling any securities for three days after being featured in our advisories or on our website. StreetAuthority is a publisher of financial news and opinions. StreetAuthority is not a securities broker/dealer or an investment advisor and we do not recommend or endorse any brokers, dealers or investment advisors. This work is based on SEC filings, current events, interviews, corporate press releases and publicly available information which may contain errors. All information contained in our newsletters and/or on our website(s) should be independently verified with the companies or sources mentioned. 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