Don’t Fight the Fed, Adapt Your Strategy To Protect Your Future Regarding Money

The Fed dictates the game, you have to adapt to take advantage of it.

Sylvain Saurel
Jan 22 · 7 min read
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Image: Annie Spratt / Unsplash

the world of investment, some adages are often repeated. Among these adages, there is one that is perfectly suited to the situation we have been experiencing since the beginning of the COVID-19 crisis. This adage is easy to remember:

“Don’t fight the Fed”

This adage is based on a rather simple observation.

In today’s monetary and financial system, central banks dictate the rules of the game. As the central bank of the world’s leading economic power, the Fed is obviously the one dictating the rules of the game to the rest of the world.

When the Fed decides to print more than $3,500 billion out of thin air as it has done since March 2020, other central banks generally follow the same approach. Thus, the Fed exports the monetary inflation of the U.S. dollar. This is the famous exorbitant privilege that the U.S. dollar confers on the United States.

The Fed’s monetary policy has a huge impact on your wealth

Faced with the Fed’s actions, I notice several types of reactions. A majority of people continue to go forward-thinking that the monetary policy carried out by the U.S. central bank has no real impact on their lives. Others are stubbornly trying to fight the Fed by sticking to their initial strategy.

Finally, the latter, who are unfortunately still not numerous enough, understand that they have to adapt. These people have understood that the Fed took three major decisions in March 2020 in terms of monetary policy:

  • Program of unlimited quantitative easing.
  • Lowering of interest rates to zero.
  • Lowering to zero of the reserve requirement rate for U.S. banks.

At the time the Fed took these measures, the signal was clear: the Fed wanted to push investors into the stock market. It was the perfect time to buy shares. Many people did so, which created a Tech bubble in the stock market.

The Fed’s actions have benefited a minority of people: the ultra-rich

In the summer of 2020, Apple became the first U.S. company to surpass the $2 trillion market cap. Jeff Bezos, the CEO of Amazon, saw his fortune exceed $200 billion. The euphoria around Tesla continued throughout 2020, culminating in Elon Musk becoming the richest man in the world at the beginning of 2021.

We are in the middle of a Tech Bubble Paradox since Elon Musk is the richest man in the world while he has no money in his bank account practically.

All this money injected by central banks remains in the hands of a handful of billionaires, as shown by the collapse of the M2 Money Stock velocity in the year 2020. As a reminder, the M2 Money Stock represents the amount of U.S. dollars in circulation. The higher the velocity of the M2 Money Stock, the more dynamic the American economy is.

By reaching a low since the early 1940s, the velocity of the M2 Money Stock showed us that the American economy was totally disconnected from the stock market.

With the stock market now overvalued, the Dow Jones is still above 30,000 points, and the S&P 500 above 3,700 points, you have to adapt again. If you missed an entry into the stock market last year, it’s probably best to wait for the Tech bubble to burst.

Because you must not fool yourself, this bubble of Tech will burst sooner or later.

The Fed will continue to pursue an aggressive monetary policy in the coming years

In the months and years to come, the Fed has already announced that it will continue its aggressive monetary policy by allowing inflation to exceed 2%. The problem is that current inflation in the United States is well below this new 2% target that the Fed seems to have set as a goal.

This roughly means that the Fed is going to be able to keep printing more and more U.S. dollars out of thin air until this 2% target is reached and surpassed. The great monetary inflation that we have been experiencing for months will therefore continue.

U.S. debt will continue to explode and will reach 30,000 billion dollars. The current system is out of breath. The seven deadly sins it suffers from will eventually cause its collapse sooner or later. The IMF sees that this system cannot last forever. Thus, more and more IMF economists are calling for a Great Reset of the current system. A kind of Bretton Woods 2.0.

Unfortunately, the powerful at the head of the current system will do nothing unless they are forced to. History has already shown us many times that those who benefit most from the unfairness of a system have no interest in changing it for the greater good.

Central bankers, politicians, and billionaires, therefore, have no interest in pushing for a major change in the current monetary and financial system.

You need to adapt your strategy in the face of the Fed’s policy

For your part, as an individual, you have to adapt. You have to accept that it is impossible to fight the Fed. Overvalued, the stock market is totally manipulated, as the Fed’s actions have shown us in 2020. You can continue to play on the Fed’s playing field and risk being among those who will lose a lot of money.

Nevertheless, this is not an exciting prospect.

If you take the time to analyze the situation, you will understand that you currently have three solutions left to avoid losing out on the Fed’s policy:

  1. Buy gold.
  2. Invest in real estate.
  3. Protect your savings with Bitcoin, which is the best savings technology in the world.

Gold and real estate are possibilities but suffer from limitations

Gold has proven to be an excellent store of value in times of crisis for several centuries. Nevertheless, gold is gradually becoming obsolete in a world where everything is digitalized. Moreover, gold’s upside potential remains more than limited.

Finally, gold suffers from a major problem, in my opinion: it can be easily seized by governments. This has already happened in the past, and it may very well happen again one day.

Investing in real estate is a good thing to take advantage of such low-interest rates.

The problem here is that it is something that is still reserved for a certain minority of people. The poorest people don’t have the opportunity to invest in real estate. If you can, it’s a good thing to diversify your assets. If not, you have to find another solution.

Saving your money in the Bitcoin network allows you to get off the Fed’s playing field

Then all you have to do is discover the best savings technology in the world. I’m talking about Bitcoin here. It is often said that saving money in a bank account means losing money. This paradigm is true in today’s monetary and financial system, where the endless monetary inflation of the U.S. dollar slowly but surely impoverishes you.

Bitcoin is a total paradigm shift. The maximum supply of Bitcoin is frozen at 21 million units. This is something engraved in the Bitcoin source code. The monetary attributes of Bitcoin protect you and allow you to save your money safely in the Bitcoin network.

By placing the fruits of your labor in the Bitcoin network, you have several guarantees:

  • It will still have the same value in BTC in 1 year, 5 years, 10 years, …
  • It will gain value against a weak currency like the U.S. dollar.
  • No one will be able to stop you from using it as you wish.
  • No one will be able to take it away from you. As long as you have the private keys to your BTC, no one can confiscate it from you.

The choice of Bitcoin may seem daring today, but in a few years, it will be a natural choice for a majority of people who want to save the fruits of their labor. If you make the effort to understand why Bitcoin works and how it works today, you will still be among the early adopters. This is a unique opportunity that you should definitely consider.

Final Thoughts

You should not be fighting the Fed. The Fed dictates the rules of the game and can change them at any time. So you have to constantly adapt by evolving your strategy to take advantage of the changes in monetary policy that the Fed decides.

Right now, probably the best thing to do is to save the fruits of your labor in the Bitcoin network and invest in real estate if you have the capacity to do so. The essential advantage of Bitcoin is that it guarantees that the rules of the game will not change during the course of the game.

Twelve years after its creation, Bitcoin still follows the same rules that are engraved in its source code. No one will be able to change them without a consensus of the majority of Bitcoin users. Since no one has an interest in changing these rules, you can consider Bitcoin as the best hedge against uncertainty.

In the world we live in, Bitcoin gives you essential guarantees, unlike the Fed. It is up to you to make the effort to discover this new system to really protect your future regarding money.

This article is for informational purposes only not all information will be accurate. This should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.

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Sylvain Saurel

Written by

Entrepreneur / Developer / Blogger / Author. In Bitcoin We Trust:

Making of a Millionaire

Stories about money, personal finance and the path to financial independence.

Sylvain Saurel

Written by

Entrepreneur / Developer / Blogger / Author. In Bitcoin We Trust:

Making of a Millionaire

Stories about money, personal finance and the path to financial independence.

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