Doody Calls Central Banking

<January 14, 2026>

During every asset bubble, I like to collect souvenirs. In the Tech Bubble, I printed out the description page of every Nasdaq 100 company and tucked them into my desk—a reminder that no matter how crazy things seem, they can always get crazier. I even bought a few put options to commemorate the mania. They expired worthless just a few months before the bubble finally popped—a reminder that it’s difficult to time a bubble’s demise.

During the Housing Bubble, I photographed every condo being built in Jacksonville Beach, Florida, as a new skyline took shape. I even bought a Mr. Housing Bubble T-shirt, which read: “Take a bath in the real estate market with Mr. Housing Bubble.” If you can’t laugh at the absurdity of asset bubbles, you’ll likely have a hard time surviving them.  

Now we have the “Everything Bubble,” which makes choosing a souvenir trickier. Should I collect private equity pitch decks, buy some Fartcoin, or invest in virtual real estate? Or maybe I’ll just buy Nvidia—essentially an 8% stake in the S&P 500 wrapped inside a single stock. If the bubble never pops, at least I’d still make some money.  

While driving home last week, I passed a front-yard sign that could easily become my next bubble souvenir. It read, “We scoop dog poop.” I immediately wondered: how large does an asset bubble have to become before someone comes to your house to pick up your pet’s waste? In the Internet Bubble, we built new digital infrastructure. In the Housing Bubble, we installed new granite countertops. And in the Everything Bubble, we created the professional pooper-scooper industry.

Curious about the pet waste removal business, I did a little research. It turns out it’s a real and growing industry, with revenues around $70 million. DoodyCalls claims to be the “#1 market leader in picking up #2," disposing of 10 million doggie deposits each year. Rates typically run $15-$25 per weekly visit. Not quite a cable bill, but still a meaningful chunk of discretionary income to pay someone else to scoop the poop. Thank goodness for asset inflation and the resources it provides to create such vital and thriving industries!  

During his last press conference on December 10, 2025, Chairman Powell was asked about his legacy. He replied that he hoped to hand his successor an economy in good shape. Assuming the Everything Bubble doesn’t pop, the economy may indeed appear relatively healthy when he steps down. But that’s not how—or why—we’ll remember Jerome Powell.

In our view, Chairman Powell’s legacy is that of a central banker who attempted to pull back from the extraordinarily easy monetary policies of his predecessors, only to be repeatedly rattled into reversing course time and again. The “Powell Pivot” is how he’ll ultimately be remembered—abruptly adjusting policy to address financial instability, fiscal imbalances, and above all, to ensure the Everything Bubble didn’t pop on his watch. In effect, Powell’s pivots became a way to clean up the mess—or the doody—left behind by Wall Street, Washington, and previous Fed chairs.      

Powell’s first pivot came after his attempt to tighten policy in 2018. After raising rates for much of the year, the S&P 500 revolted, falling nearly 20% from its September peak to its December low. Powell responded by signaling that the Fed would be patient with future rate hikes. In fact, the December 2018 increase would be the last for that cycle, setting the stage for his next pivot in 2019.

In September 2019, a sudden spike in short-term rates in the repo market caused the Federal Reserve to step in with direct funding. To prevent future disruptions, the Fed announced it would purchase $60 billion of Treasury bills each month. While not officially labeled a bailout—or quantitative easing (QE)—these operations stabilized short-term borrowing rates and supplied markets with the liquidity needed to keep asset prices inflated.   

Powell’s next and most dramatic pivot came during the 2020 COVID crisis. With stocks collapsing and credit spreads blowing out, the Fed used its very heavy hand to calm markets and help finance a massive surge in government spending. The federal funds rate was slashed to zero, and the Fed’s balance sheet ballooned from just over $4 trillion to nearly $9 trillion. It was an unprecedented intervention that unleashed an extraordinary burst of money creation, ultimately fueling significant asset and consumer price inflation.

Once it became clear that the resulting inflation wasn’t transitory, the Fed began raising interest rates in 2022. That belated monetary tightening exposed stress in the banking system, ultimately leading to several bank failures in 2023—and yet another Powell pivot.

After Silicon Valley Bank and Signature Bank collapsed in March 2023, the Fed rushed in with its Bank Term Funding Program. The program allowed banks to borrow from the Fed using collateral valued at par, even when the market value of that collateral was much lower. Once again, Powell and the Fed stepped in to keep the banking system stable and ensure the liquidity needed to support the Everything Bubble kept flowing.

Powell pivoted again in 2024, cutting interest rates in September, November, and December, even as inflation persisted above the Fed’s 2% target and financial conditions remained extremely loose. These cuts were largely considered precautionary, or insurance against a softening economy and labor market.

In 2025, the economy continued to grow, unemployment stayed low, and the stock market hit record highs. Yet the Fed pressed on with rate cuts and ended quantitative tightening (QT) on December 1. Just days later, Powell implemented his final pivot, announcing a new round of Treasury bill purchases beginning December 12—effectively a return to quantitative easing, even with inflation and financial markets running hot.

During most of Chairman Powell’s tenure, he has been cleaning up after those who overpaid, overleveraged, or overlent. In effect, he’s been the pooper-scooper of central banking.

We won’t remember Powell as an effective protector of our purchasing power. Instead, we’ll remember him as the chairman who kept the Everything Bubble inflated—aggressively expanding the Fed’s balance sheet, driving record-high asset prices, fueling wealth inequality, creating an affordability crisis, and leaving a government increasingly dependent on the Fed to finance its debt. By constantly pivoting and cleaning up, we believe Powell has left his successor with a monumental mess.   

In a world overflowing with liquidity and speculation, there’s no doubt more financial “accidents” are on the way. Fortunately, we have a central bank filled with skilled monetary pooper-scoopers who, in our eyes, will always be #1 at picking up #2. 

Eric Cinnamond

eric@palmvalleycapital.com

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Definitions:

S&P 500: a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices and includes approximately 80% of the total market capitalization of U.S. public companies.

Nasdaq 100: a stock market index that includes 100 of the largest non-financial companies listed on the Nasdaq stock exchange, representing various industries such as technology, healthcare, and consumer goods. It is weighted by market capitalization, meaning larger companies have a greater influence on the index's performance.

Credit spreads: A credit spread is the difference in yield between two debt securities with different credit qualities but the same maturity, often used to assess the risk associated with corporate bonds compared to safer government bonds. It reflects the additional yield that investors demand for taking on more risk.

The Everything Bubble: refers to a situation where the prices of various financial assets, including stocks, real estate, and cryptocurrencies, are inflated to unsustainable levels, often due to central bank policies like quantitative easing. This phenomenon suggests that asset valuations are disconnected from their underlying economic fundamentals.

Fartcoin: a decentralized, peer-to-peer cryptocurrency launched in October 2024, known for its humorous and lighthearted branding. It operates on the Solana blockchain and is categorized as a memecoin, drawing its appeal from internet culture and social media trends.

Repo market: The repo market, or repurchase agreement market, is a financial market where short-term loans are made using securities, typically government bonds, as collateral. In a repo transaction, one party sells securities to another and agrees to repurchase them later at a higher price, effectively borrowing money for a short period.

Quantitative Easing (QE): Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy by purchasing large amounts of government bonds and other financial assets. This process increases the money supply and lowers interest rates, with the goal of encouraging lending and investment.

Fed funds rate: The federal funds rate is the interest rate at which banks lend reserve balances to each other overnight. It is a key tool used by the Federal Reserve to influence monetary policy and economic conditions.