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Robert J. Samuelson: The Old Fed Is Dead
Investors Business Daily ^ | September 17, 2016 | ROBERT J. SAMUELSON

Posted on 09/19/2016 5:48:18 AM PDT by expat_panama

The betting is that the Federal Reserve won't raise interest rates at this week's meeting of the Federal Open Market Committee, its key policymaking body. There are already complaints that the Fed, which cut short-term rates to near zero in late 2008, is waiting too long to reverse low rates. Last December, the Fed increased rates by a quarter of a percentage point. It hasn't done anything since.

"The Fed will make a major mistake if it doesn't raise rates," says economist Mark Zandi of Moody's Analytics. "The job market is strong and very close to full employment. Inflation is close to target (2% annually) and financial markets are in good shape."

Yet, Zandi doubts the Fed will raise rates by another quarter percentage...

...One idea tried in Europe and Japan is "negative interest rates."...

... "Instead of receiving interest on the reserves they hold with the central bank, (commercial) banks are charged a fee...

...negative rates would be used only as a last resort.

The old Fed is dead. The notion that it could orchestrate economic growth within narrow bounds was excessively optimistic and unrealistic. It may be, as economist Allan Meltzer of Carnegie Mellon University has long argued, that basic problems burdening the economy can't be solved by increasingly large doses of easy money and credit. If too many rules and requirements thwart business startups, easy money is not a solution.

But the public may think it is. The Fed is now a prisoner of exaggerated expectations created in a friendlier era. If it fails to live up to those expectations, it may become the target of the public's wrath. There are already signs of this. It will do no one any good to be angry at the Fed for things it can't do.

(Excerpt) Read more at investors.com ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: economy; fed; investing
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1 posted on 09/19/2016 5:48:18 AM PDT by expat_panama
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To: expat_panama

The Fed needs an autopsy/audit.


2 posted on 09/19/2016 5:51:26 AM PDT by ClearCase_guy (Abortion is what slavery was: immoral but not illegal. Not yet.)
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To: expat_panama

“The job market is strong ...”

Well this guy’s an idiot.


3 posted on 09/19/2016 5:51:36 AM PDT by JPJones (George Washington's Tariffs were Patriotic. Build a Wall and Build a Wall of tariffs.)
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To: JPJones

only 40 percent unemployment. A number Trump said and fact checkers agreed on.


4 posted on 09/19/2016 5:53:58 AM PDT by dp0622 (The only thing an upper crust conservative hates more than a liberal is a middle class conservative)
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To: expat_panama

The Federal Reserve is at war on the middle class.


5 posted on 09/19/2016 5:57:04 AM PDT by CIB-173RDABN
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To: JPJones
"The job market is strong and very close to full employment. Inflation is close to target (2% annually)... "

This guy Zandi is not only an idiot but you can tell he doesn't buy his own groceries, either ...

6 posted on 09/19/2016 6:01:06 AM PDT by Ken522
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To: CIB-173RDABN

I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.
~ Woodrow Wilson


7 posted on 09/19/2016 6:10:18 AM PDT by WKUHilltopper
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To: expat_panama

The FED will do whatever it can to make Trillions of dollars for its owners the world bank.


8 posted on 09/19/2016 6:13:08 AM PDT by mountainlion (Live well for those that did not make it back.)
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To: Ken522

Zandi is a well-know Rat apologist and economist. He has zero credibility. He is laying the groundwork for the Fed to wreck what economy there is left when Trump gets elected.


9 posted on 09/19/2016 6:15:29 AM PDT by RatRipper (The biggest threat to US national security is our government and those in it.)
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To: JPJones

Yes, he is repeating false data provided by the administration. This idea that the FED can create any economic growth by itself is very limited at best. We have both houses of Congress full of attorneys who know very little about economics and business. Sound monetary policy starts with our tax system and budget. The highest corporate taxes in the world do not encourage jobs, new business or anything positive. More regulations on business create more problems. Not one person here has ever spent their way out of debt, and; we have Obama and the Dems spending money like drunken sailors on every welfare program to stay in power. We cannot afford this 19 trillion plus debt. We keep seeing Obama add millions of Hispanics and Muslims to the welfare roles. Yes, the Hispanics do work, and some Muslims do. These Syrians have no skills period. The jerk who just blew up a bomb is from Afghan. Why aren’t these SOB’s doing the fighting as opposed to our military.


10 posted on 09/19/2016 6:18:01 AM PDT by Lumper20
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To: ClearCase_guy

I like and wholeheartedly agree with your comment.

What took Mr. Samuelson so long to figure out that the Fed was not effective? Millions of ordinary people knew this simple fact long ago: you can’t print your way to prosperity. It was an absurd notion from the get go yet the Fed embraced it.


11 posted on 09/19/2016 6:18:20 AM PDT by Starboard
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To: Lumper20

Excellent comments. The clueless congress and a pernicious president have taken us down a very destructive path that will be difficult to recover from.


12 posted on 09/19/2016 6:23:26 AM PDT by Starboard
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To: JPJones

Really. Where do I get what he is smoking?


13 posted on 09/19/2016 6:27:16 AM PDT by wastoute (Government cannot redistribute wealth. Government can only redistribute poverty.)
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To: JPJones

Yes, he is repeating the false data provided by the administration. This idea that the FED can create any economic growth by itself is very limited at best. We have both houses of Congress full of attorneys who know very little about economics and business. Sound monetary policy starts with our tax system and the budget. The highest corporate taxes in the world do not encourage jobs, new business or anything positive. Welfare creates a dependent class that will only get larger. We have had our welfare programs and exactly what non citizens can receive printed in many languages for years. More regulations on business create more problems. Not one person here has ever spent their way out of debt, and; we have Obama and the Dems spending money like drunken sailors on every welfare program to stay in power. We cannot afford this 19 trillion plus debt. We keep seeing Obama add millions of Hispanics and Muslims to the welfare roles. Yes, the Hispanics do work, and some Muslims do. These Syrians have no skills period. The jerk who just blew up a bomb is from Afghan. Why aren’t these SOB’s doing the fighting as opposed to our military.


14 posted on 09/19/2016 6:36:46 AM PDT by Lumper20
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To: expat_panama

They’ll wait ‘til President Trump takes office, then raise rates to catastrophic heights. Scorched earth policy, to harm their “enemy”.


15 posted on 09/19/2016 6:37:29 AM PDT by JimRed (Is it 1776 yet? TERM LIMITS, now and forever! Build the Wall, NOW!)
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To: RatRipper
He is laying the groundwork for the Fed to wreck what economy there is left when Trump gets elected.

Exactly, per my post #15.

16 posted on 09/19/2016 6:40:03 AM PDT by JimRed (Is it 1776 yet? TERM LIMITS, now and forever! Build the Wall, NOW!)
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To: expat_panama

The nearly $20 trillion Federal Debt.
That is REALLY what will keep them from raising rates.

None of the theories behind monetized central banking
accounted for the fact that government might become
far and away the largest debtor.


17 posted on 09/19/2016 6:40:43 AM PDT by Buckeye McFrog
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To: expat_panama

Abolish the Fed.


18 posted on 09/19/2016 6:43:05 AM PDT by Arm_Bears (Rope. Tree. Politician/Journalist. Some assembly required.)
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To: Lumper20

Sorry for the repeat. I had a call and clicked again.


19 posted on 09/19/2016 6:43:58 AM PDT by Lumper20
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To: JimRed

If they go scorched earth, they may be handing a magic wand to a very pro-business guy. Things that might have been “impossible” could become achievable if people panic and look to a strong president to perform miracles.

I’m thinking Fair Tax.
I’m think no government unions of any kind.
I’m thinking no Dept of Energy, Education, EPA, USDA, etc. etc.
I’m thinking balanced budget.
I’m thinking paying down the debt.
I’m thinking social security reform.

Go ahead. Go scorched earth. We need an excuse to make some BIG changes.


20 posted on 09/19/2016 6:45:30 AM PDT by ClearCase_guy (Abortion is what slavery was: immoral but not illegal. Not yet.)
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