Posted on 06/15/2022 11:21:27 AM PDT by Browns Ultra Fan
Sometimes I wonder if The Federal Reserve Board of Governors pays attention to economic news. For example, the Atlanta Fed’s GDPNow forecast for Q2 was released today at -0.002%. So what does The Fed do? They raised their target rate by 75 basis points to 1.75%.
Apparently, The Fed has chosen to fight inflation rather than help the economy.
The Fed has chosen poorly.
(Excerpt) Read more at confoundedinterest.net ...
All part of the plan.
I’m not an economist so a lil confused by your post. I thought the feds almost had to raise rates to get closer to the inflation rate to slow it.
Also, they unwinding of their balance sheet was almost inevitable since they’ve carried this gargantuan debt on their books for years.
You must be rich. You can afford the tax called inflation and you love it! That is call Democrat economics.
They raised their target rate by 75 basis points to 1.75%.
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This move will help drive the price of everything up for everyone in the Western world and Japan, and is part of the plan to create a world wide Depression.
If this hike does not succeeded in raising the prices of commodities, especially crude, to levels that consumers cannot afford, they will raise the rate drastically again - rinse and repeat until there is no more prosperity in the West, only misery, poverty, disease and death.
This is the 0bama-Biden Approach. First slow heat under 0bama, then rid of Trump the Prosperity Maker, raise to full boil under Biden. When the water in the pot all boils off, the rebuilding will begin.
The problem is that you don't see the effect of rate changes for 12 months. So constantly responding to short term changes in inflation virtually guarantees that you will overshoot the rate hikes. And that means a recession.
And they don't have to unwind the balance sheet. They can let the debt mature. Which would be a natural unwinding. Or they can purchase new debt as the old expires.
At this rate, I think they will throw the economy into recession with excessive rate hikes, and then they will expand the balance sheet even more as they try to inject liquidity back into the system after they tanked it.
Just my opinion. Ought to be yours.
This whole process of fed monetary policy should be much more data driven and not at all politically skewed.
The Fed is months late raising rates. The Fed should have raised a full point. CNBC, Jim Cramer, and the stock market cheerleaders don’t want to hear that.
People crying over the 0.75% raise don’t realize what is going on. Failure to get inflation under control means 10 years of inflation and a catastrophic wage inflation spiral. It is some pain now vs. massive pain later. I will take some pain over massive pain, thank you.
You also have to realize the game is already lost. We lost the game when they pumped $6 trillion “stimulus” into the economy and when the Fed put $9 trillion on its balance sheet. Now we are just paying the price.
Anybody who thinks the Fed choose wrong today does not understand the severe economic crisis we are in, we are facing, and the risk of the economy going into a depression. People thinking the Fed choose wrong are either short sighted or don’t understand the long term risks.
>>Just my opinion. Ought to be yours.<<
Lol...I really have no opinion. Just along for the ride trying to make sense of all this.
I believe we are already in a recession. Two consecutive quarters of neg or no growth. Last quarter and...
I loved the headline this a.m.. Retail sales UEXPECTEDLY drop. haha
My position is that there is no such thing as “economics”. It should be data driven. It should be all about math. But as far as I can tell, “economics” in practice is merely political science — “let’s push buttons so that we look good and can get re-elected”. That’s what “economics” is today.
The plan for stagflation. biden is using Carter’s plan, which caused him to diagnose the problem as a ‘moraise’ settling over the country.
I prefer the opposite approach. I think it should be 100% political. The Fed is an illegal entity. Congress should have to vote on rate increases or decreases. This way you get to vote on the idiots voting on policy. At some point, they are required to confront their voters and explain themselves. The Fed is never required to do that.
It’s not a hard science. I don’t envy the FED their job.
But given that they know it takes 12 months to see an effect, I would guard against overreacting. Just because the market prices in a price increase, is not a given that you should do it.
I disagree with your post that raising lending rates raises commodity prices.
Raising rates makes it harder to borrow, which reduces demand, which reduces price pressure. Over the long term, raising rates reduces asset prices.
Think about it. Asset prices soared while the Fed left the prime rate at 0.25% for 2 straight years. If low rates caused low prices, we would have seen disinflation over the past 2 years. Instead, houses are up 30% over the past 2 years — because, low rates increase prices. High rates lower prices.
Your post is baffling.
> The Fed has chosen poorly.
I disagree. Inflation is the #1 cancer at the moment.
so then the proper interest rate is 9%
or if we are really playing
19%
So clearly inflation is not their main issue
Economic illiterates who want the bezzle to continue unabated.
It can’t happen. Your bubble (the everything bubble) needs to pop. The time to be all ‘the fed shouldn’t be doing this’ was when the fed started blowing up the bubble in the first place with stupidly low interest rates for years upon years.
You wanted to avoid a hangover, so you just stayed drunk. Well, eventually you pass out and the hangover is exponentially worse than it would have been otherwise.
Be a man and take an Alka-Selzer. Things are just getting started.
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