“The Nugget” and The Federal Reserve

[Teach]

Years ago, make that decades ago, I visited a hotel/casino in Sparks, Nevada called John Ascuaga’s “Nugget". In my younger, more degenerate days I was making annual “pilgrimages” to Las Vegas. Yet, on one occasion, I ventured north in “The Silver State” to Reno-Sparks.

As always, when I took my gambling “junkets,” I would try to save money wherever I could on my non-gambling expenses, e.g., food, accommodations, etc. So, that year, when I visited “The Nugget," I noticed that they featured “cut-rate” suites that they called: “Roof Gardens.” This choice would fulfill my “no frills” approach. What I ended up with, in hindsight, was more than I had bargained for - or should I say, less.

Let me begin by stating that I've never stayed “in the joint,” the “slammer.” Yet I’ve read books and seen videos on prison-life. One thing I noticed is that cells in the hoosegow are tiny. I quickly learned that the same was true when it came to John Ascauga’s “Roof Garden” “apartments." Cramped. That, my friends, would be an understatement.

Moreover, I kid you not when I say that not a square inch - notice I didn’t stay square foot - was spared. The room was such that you had, at most, about two feet on either side of the bed. At the end of this room was a toilet and tiny shower. If you were claustrophobic, you couldn’t have stayed in that room.

That brings me to the second part of my current post, the Federal Reserve. At this juncture, you must be asking, “What can these two seemingly disparate entities have in common, a room in a gambling emporium and the central bank of the United States. Apples and oranges." But wait. That teeny-tiny room at “The Nugget” and the Fed’s attempt to reign in inflation; in a manner of speaking, do have similarities. First of all, in both cases, there was then, and currently is, little "wiggle-room."

As stated, in one of those “Roof Garden" rooms one could actually hurt yourself getting out of bed, and it wouldn’t be from ”falling out of bed,” it would be from cracking your head against the wall. In this same vein, the Fed, as stated in a previous post, is somewhere between “a rock and a hard place.” Where do they go? Where can they go? What do they dare do? At Chairman Powell's recent press conference there was hinted that there could be one more quarter-point tightening at the Federal Reserve's May meeting. Apparently, after that, its appears that the Fed will “stand pat” for the remainder of the calendar year. Yet, as the song goes, “Che Sera Sera…” "The future is not ours to see."

Further, what complicates all this is the current “mystery,” our banking world. I ask, "How serious is it? Is it isolated, or is it more pervasive than we’re being told?" As for me, I wish the authorities would be more “transparent.” So many questions, so few answers. Bottom line: Is my bank safe?

Furthermore, on this issue, as I understand it, the FDIC "bailed out" all depositor-accounts at SVB, even if their accounts were in excess of the 250k max. Personally, I don’t like that. Not that I don’t want to see depositors made whole, but more from the idea that the government is establishing a precedent, one that is contrary to law. Why? Hypothetically, what if the FDIC had to bail out depositors at several other banks? Is there the possibility, in that circumstance, that the FDIC could “run out of money”? Will, under to those circumstances, the motto be: “If your bank is going to fail, make it early!"

As I change gears and hark back to my Reno-Sparks trip, I found it quite enjoyable; yet one thing's for sure, no more “Roof Garden” lodging, even if it did allow me more money for gambling. As my mother would oft say: “Penny-wise and pound foolish.”

As for the Fed, I personally believe they’re in, as we used to say, “a pickle.” They’re at the mercy of possible exogenous events, not the least of which is the possibility of a string of bank failures. There is, also lurking, the issue of a possible “hard” landing.

In closing, in these current times, I don’t know how anyone can make economic projections several months out. These are not calm seas. These times are filled with potentially turbulent events. It’s more like day-to-day than month-to-month.

Finally, this post discussed two seemingly disparate entities, a room in a casino-resort and the actions of the Federal Reserve. Yes, admittedly, one was in the past, the other, in the present. Yet, when it came to “movement," one involving spatial aspects, the other involving economic events, there are similarities. In the case of my room at “The Nugget,” I “bit the bullet” and endured my three days in “tight quarters.” As for the Fed, I don’t think anyone truly knows how this is all going to turn out.