Dr. Max Jacobson became known as Dr. Feelgood and “Miracle Max” for treating wealthy celebrities with concoctions, “mixing amphetamines, vitamins, enzymes, tranquilizers, placenta, and anything else that inspired him.” Jacobson’s most famous client was President Kennedy, who became sadly dependent on Jacobson’s “elixirs.”
How much speed, narcotics, and other powerful drugs Jacobson injected into Kennedy we will never know. Certainly, Jacobson’s elixirs allowed Kennedy to override his body’s signals that would have led to more sustainable treatments for his ailments.
The Fed has become the economy’s Dr. Feelgood with its expansionary monetary policy. The lender of last resort has become the prime pusher of financial amphetamines. The Fed is promoting moral hazard by working overtime to eliminate consequences for risk-taking. Such policies didn’t begin with Covid-19.
Along with staggering increases in the money supply, the Fed’s balance sheet has almost doubled from about $3.8 trillion in August 2019 to $7.4 trillion in January. With the Fed’s willingness to support corporate debt, even junk bonds have plunged to record low yields. President Biden wants to “go big” with new deficit stimulus programs that will need still more of the Fed’s largesse.