Can The Fed Fix Biden/Congress Spending Addiction? Volcker, Greenspan, Yellen, Powell All Pushed Rates Lower … Until Biden (Fed Still Ignoring Taylor Rule) Mortgage Rates Continue To Climb

Confounded Interest ^ | 10/21/2023 | Anthony B. Sanders

[Kaiser8408a]

I had a wonderful time speaking at the Passive Investors Conference last night. One question I was asked was “Why doesn’t Powell (the current Fed Chair) pull “a Volcker” to cool inflation. She was referring to former Fed Chair Paul Volcker’s sudden raising of The Fed’s target rate which resulted in a cooling of inflation, but also an increase in the 30-year fixed mortgage rate to 16.63% in 1981.

Notice the trend in the Fed’s target rate and 30-year mortgage rate after Volcker’s rate shock. The trend in both has been downward as inflation was cooled.

But, each Fed Chair ranged from hyperactive to hypoactive (meaning doing little). Volcker and Greenspan saw wild swings in The Fed’s target rate. Bernanke pretty much only lowered rates AND expanded the Quantitative Easing (QE) or asset purchases by The Fed. And nothing has been the same since.

Yellen, now Treasury Secretary, continued Bernanke’s practice of zero interest rate policies (ZIRP) and QE (asset purchases) … until Donald Trump was elected President. In fact, Yellen raise rates only once prior to Trump’s election as President. Then raises rates 8 consecutive times. This is why I call Yellen “TLTL Janet”. Too low for too long Janet.

The she was replaced with DC insider Jerome Powell. Trump’s economy was strong (one explanation for Yellen trying to cool the economy with 8 consecutive rate hikes). But the Covid struck and Powell/Fed Open Market Committee overreacted, lowered the target rate back to 25 basis points and massively expanded the balance sheet. Powell also oversaw a rapid increase in the target rate, very Volckerish! But Powell stopped short of the rate suggested by The Taylor Rule of around 6.5% to 8.17%. The current target rate is 5.50%. So, Powell stopped far short of rates need to cool inflation

[minnesota_bound]

Donald Trump vs Biden
MORTGAGE RATES 2017-2023

Jan. 19, 2017: 4.09%
Jan. 21, 2021: 2.77%
CHANGE: -32%

Jan. 21, 2021: 2.77%
Sep. 07, 2023: 7.12%
CHANGE: +157%

[Sequoyah101]

Ah, still saving. I did that once before I retired.

[fatboy]

Very well said.

As I repeat to many I run into during the day “we can’t do much about how our government does things but we can look out for ourselves and do the best for our families so that when it all comes apart, we will at least be in better than average shape.”

[rmlew]

BiteMe’s appointees are mostly Joo-ish - Khazarians, they are out to Fleece US
Many are ethnic Jews. Not all of these Jews are Ashkenazi. Ashkenazi Jews aren't Khazars. The vast majority of Khazars weren't Jews and most Khazarians weren't Khazars. And no one has been Khazarian in a millennium.

[MortMan]

Biden: “I can’t be out of money! I still have checks!!!”