Golden Spoon Investment Portfolio - Chapter 69

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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69. Now the storm is about to begin.

President Davidson stared at Federal Reserve Chairman Monroe in undisguised bewilderment, his silence stretching on.
His shock was understandable—thanks to low interest rates, the United States had weathered the savings and loan crisis that had shaken the nation, and the economy continued to flourish, yet Monroe was suddenly proposing to raise the benchmark rate. It was incomprehensible.
Moreover, with the midterm elections looming in November, the announcement felt like a bolt from the blue.
Chief Secretary Huxley, standing beside him, wore an expression of genuine shock as he pressed for clarification.

“You’re saying you’ll raise the benchmark rate?”

Monroe nodded calmly in response.

“That’s right. I’m thinking of raising the current benchmark rate from 3% to 3.25%—a 25 basis point increase.”

Chief Secretary Huxley leaned forward, immediately voicing his opposition.

“There’s no problem in the markets, the economy is thriving—why raise rates so suddenly?”

President Davidson’s expression darkened visibly, clearly sharing the same concern.
Raising the benchmark rate would weaken the economy and inevitably damage the midterm elections—a natural reaction.
Anticipating this resistance, Monroe explained his reasoning for the rate increase with measured composure.

“While low interest rates have sustained American economic growth, they’ve simultaneously increased inflationary pressures.”
“….”
“Fortunately, inflation hasn’t emerged yet, but once it does, it will inflict severe damage on the entire economy and prove extraordinarily difficult to suppress.”

The nightmarish inflation of the seventies remained vivid in memory, so when Monroe mentioned the possibility of price spikes, both President Davidson and Chief Secretary Huxley’s expressions grew grave.

“Therefore, I intend to preemptively raise the benchmark rate slightly to suppress inflation before it resurfaces.”

President Davidson, seated at the head of the table, spoke reluctantly.

“I understand the Federal Reserve’s concerns well enough. But with inflation signals still relatively modest, aren’t you reacting too hastily?”
“Exactly. Price stability matters, but I worry we might damage the current economic prosperity.”

Observing their negative responses, Monroe smiled inwardly with a wry amusement.

‘They’re not worried about the economy—they’re afraid it’ll hurt the elections.’

Without revealing his true intentions in the slightest, Monroe persuaded President Davidson.

“Inflation is something that can emerge suddenly at any moment, without warning. And given the current situation where massive amounts of money have flooded the market, the danger is all the more acute—there’s no need to elaborate further.”
“….”
“The idea is to act preemptively, avoiding the risk of having to slam on the brakes later, and instead engineering a soft landing for the economy.”

At that, Chief Secretary Huxley immediately countered.

“While you call it a preventive rate hike, if investors don’t see it that way and panic instead, wouldn’t the stock and bond markets collapse, potentially triggering the very hard landing you’re trying to prevent?”

President Davidson, who had been listening quietly, interjected with his own thoughts.

“I’m inclined to agree. There’s no pressing problem at the moment, so I think it’s better to monitor price movements and hold off for the rest of this year.”

In other words, he was suggesting they postpone the federal funds rate increase until after the midterm elections.

‘Once the midterms pass, he’ll pressure me to delay it again, using the upcoming reelection as an excuse.’

Even Monroe found it burdensome to clash with the president, who held the power of appointment.
Yet with the midterms still some time away, this was the only window to raise rates—backing down now would make it far more difficult later.

“As I mentioned before, inflation is precisely the kind of threat that can strike without warning. And multiple indicators are already showing signs of it.”

Monroe continued, observing President Davidson’s displeased expression as he stood with his arms crossed.

“If we let this slide and inflation erupts a few months from now, it will become a major burden not just for the Federal Reserve, but for the White House as well.”
“Hmm.”

As Monroe obliquely warned that an inflation crisis could emerge before the elections, President Davidson furrowed his brow and let out a low murmur.
If that happened, with his approval ratings already declining, the election would be all but lost.
Seeing the president’s stern expression, Monroe spoke in a soothing tone.

“So the idea is to administer a preventive rate hike, like a vaccine, to signal that the Federal Reserve is vigilant about inflation.”
“Won’t the market be startled and suffer a shock?”

Noticing the president’s slightly shifted stance from his initial position, Monroe quickly responded.

“That’s precisely why, though some within the Federal Reserve argued we should raise rates by 50 basis points at once to decisively suppress inflation, we’re taking a cautious baby step approach with just a 25 basis point increase.”
“50 basis points? That’s practically asking to destroy the market.”

Monroe, the Federal Reserve Chair, spoke as he observed President Davidson with his eyebrows raised.

“I share the same view. A 25 basis point increase would certainly cause some turbulence, but the market should stabilize quickly without spiraling into a panic.”
“Hmm.”

President Davidson, his expression grave with contemplation, turned his head and fixed his gaze on Chief Secretary Huxley.

“What’s your assessment?”

Chief Secretary Huxley paused thoughtfully before responding.

“Ideally, we wouldn’t raise rates at all, but if we must, it’s better to act sooner rather than later. That way, if problems arise, we’ll have time to respond.”
“That’s what I thought as well.”

President Davidson nodded slightly in agreement, then rested both arms on the sofa’s armrests.
He then spoke to Monroe, who was waiting for his response.

“Very well. However, make sure to explain the Federal Reserve’s intentions clearly through a press conference so the market doesn’t suffer too severe a shock.”
“I will do so.”

Though the Federal Reserve was an independent institution, the reality was that it couldn’t ignore the White House’s concerns.
As approval came more easily than expected, Monroe felt a quiet sigh of relief escape him.
For some time afterward, the three men engaged in a deep discussion about their course of action following the benchmark rate increase.

* * *

Two weeks later, on the afternoon of February 4th.
The executive office of the Eldorado Fund, with its expansive floor-to-ceiling windows overlooking the brilliant blue East River, was gripped with tension as the interest rate announcement approached.
Landon Shore, seated on the left sofa, muttered as he checked the Rolex watch on his wrist.

“It should be coming out soon… but time seems to be crawling today.”

Unlike Landon Shore, who kept glancing at his watch in agitation, I sat in the center, my expression serene as I sipped my coffee from a teacup.

“The announcement will come when it comes. There’s no point in being so anxious.”
“If the benchmark rate doesn’t increase as expected, our position will suffer serious damage. How can you not be concerned?”

Andrew, seated across from me with a tense expression, looked at me with eyes that questioned my audacity.
I set down my teacup and responded with unhurried composure.

“The die is already cast. Fretting over it won’t change anything.”

I shrugged with an unhurried gesture, adding to my words.

“And I placed this bet because I’m confident the benchmark rate will rise. My conviction hasn’t wavered, so there’s no reason to be anxious.”

No matter how certain one might be, it was still a gamble where a single miscalculation could cost tens of billions of dollars in an instant.
Landon Shore shook his head in disbelief—if it were him, his heart would be racing and he’d be unable to sit still, yet Seokwon remained so composed and serene.

“I could never pull off what you do, boss. It’s truly remarkable.”

Andrew, who had spent decades honing his craft on Wall Street, gazed at Seokwon with fresh admiration, equally impressed by his unwavering composure.
Just then, a knock sounded at the door, and Mason hurried inside.

“The interest rate announcement just came out.”

Landon Shore leaned forward tensely, pressing for details.

“How much?”
“It was raised by 25 basis points, from 3% to 3.25%.”

Mason handed me the printed document he’d brought.
As I reviewed the materials, Landon Shore and Andrew exchanged a subtly awkward glance.
The benchmark rate had risen as expected, but the modest increase made it difficult to celebrate.
If anything, predicting how the market would respond had become far more complex, adding only to their unease.

“You can go now.”
“Yes.”

Andrew, still seated on the sofa, turned only his head to speak, and Mason acknowledged before leaving the room.
The moment the door closed, Landon Shore leaned forward and asked.

“Will the market react to this extent?”

Andrew’s brow furrowed with concern as well.

“The increase is too modest. Instead of the sharp shock we were hoping for, we might see only a gradual adjustment—a tempest in a teacup that amounts to nothing.”

Both men voiced their concerns, yet my lips still curved with an unhurried smile.

“A great dam crumbles from a single small hole. The Federal Reserve’s announcement has shattered the belief that low interest rates will persist indefinitely, and market anxiety will undoubtedly begin to spread.”

I set down the documents I was holding onto the table and looked at Landon Shore and Andrew.

“Especially in a situation like now where leverage has accumulated so massively, this will serve as the catalyst that triggers fear in the market—fear that the bubble might burst.”
“They only raised rates by 25 basis points. Will the market really take it that seriously?”

At Landon Shore’s words, I curved one corner of my mouth upward slightly.

“It’s a modest increase, but it’s the first rate hike in five years. That creates uncertainty, and uncertainty means risk.”
“….”
“The Federal Reserve is simply trying to suppress inflation, but they’re grossly underestimating just how inflated the leverage has become.”

Watching the two men listen intently, I continued speaking with a smile playing at my lips.

“If selling occurs and bond prices fall even slightly, hedge funds that have drawn massive leverage could face substantial losses. So the moment they see even the possibility of a decline, they’ll panic and start reducing their positions. Just wait and see.”
“I hope it unfolds exactly as you say.”

Landon Shore clasped his hands together and murmured like a prayer, then Andrew spoke with a serious expression.

“Still, just in case the situation develops differently than expected, I’ll prepare so we can adjust our positions immediately.”

I leaned back against the sofa and nodded slightly.

“That won’t happen, but since we can never be certain about the world, let’s prepare for it anyway.”

Before I could finish speaking, a knock sounded and Mason entered.
Receiving the gazes of all three of us at once, Mason reported urgently with an excited expression.

“Long-term bond yields are skyrocketing!”
“Is that really true?”

The moment I heard the news, Landon Shore’s eyes widened and he sprang to his feet.

“Yes! Bond selling is pouring in alongside the rate increase!”

Andrew and Landon Shore, already standing from the sofa, turned their heads toward me with startled expressions, without anyone needing to speak first.
Then, crossing one leg as I sat, I smiled deeply and spoke.

“It seems the storm is about to begin.”

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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