You’ve heard it said a million times by investors and pundits: “Don’t fight the Fed.” Indeed, we’ve said it in these pages. With its technically “unlimited” arsenal of financial firepower, the Federal Reserve Board can stimulate market activity in the direction that it favors. It’s not all powerful, but it’s perhaps the closest thing to it created by humans.

While this is no surprise to most investors, it’s always instructive to see it in action. And we just did. You really shouldn’t fight the Fed, even if it’s wrong.

Case in point. That this is true was proven pretty much conclusively by the recent action in the bond market. Exhibit one is an interesting story by The Wall Street Journal recently.

Back in March, the Fed promised a “what-ever-it-takes” corporate bond buying program. Now when the Fed says whatever-it-takes, that effectively means the sky’s the limit. The Fed can print unlimited dollars electronically by simply crediting to a bank’s account the Fed money for bonds that it might buy from that bank, for example.

Here’s the thing, as the WSJ, pointed out, the Federal Reserve thawed credit markets in March but it has yet to buy a single bond. In other words, just the announcement from the Fed that it would backstop the ...

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