Posted on 07/31/2019 1:54:16 PM PDT by Moonman62
What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world ...
As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place - no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!
Wages have been catching up for two years in a row now.
...
Wages have been constrained for decades by the Federal Reserve and our corrupt government.
The Federal Reserve’s incorrect claim that economic growth causes inflation is the main culprit.
A “yield curve” is just a line on a chart...perhaps you referring to the current inverted yield curve? If so that supports my position as bond investors are anticipating increasing inflation.
https://www.investopedia.com/terms/y/yieldcurve.asp
https://www.cnbc.com/2019/03/25/the-us-bond-yield-curve-has-inverted-heres-what-it-means.html
Trump policy remains pegged to Main Street.'
Complete garbage article. That vast 'winner' lately has been large corps. Banks especially have done very well with the tax cuts. The 'growth' spoken of out there is simply debt. The US continues to pimp out debt because wages haven't improved to cover the losses over the past decades.
Cheap money inflates stocks and real estate. Without the vast government spending we have, the economy would even be worse shape than we have.
Enough of the can kickers running .gov. We need large cuts to government spending. AOC has nothing on this group of spenders.
“The only way out is default or a massive tax in the form of heavy inflation.“
Yep. We ain’t voting our way out of this.
“I’m not sure what Trump’s long game is here.”
The man can read a balance sheet. He knows just how screwed we are.
L
“Wages have been constrained for decades by the Federal Reserve and our corrupt government.”
Little to do with current conditions, in which wages have been up sharply for every demographic - which says fed rates have not been holding job growth or wages back lately.
“The Federal Reserve’s incorrect claim that economic growth causes inflation is the main culprit.”
The fed is not at this time claiming that economic growth is causing inflation; in fact they admit inflation is not up.
So, inflation NOT up, wages up, corporate revenue is up, no lack of mortgage money out there, housing already in a bubble in some areas, by what measure should rates be going down further instead of holding steady? NONE.
President Trump is wrong and you are wrong on the Fed rates, so where does that leave you? It leaves you part of the economic bubble building team.
“The founding fathers would know what to do in a financial mess like this. They’d put up a 25% import tariff and raise it 2% per year until both the trade deficit and budget deficit were zeroed out.“
Right after they shot nearly every single sitting and former member of Congress and the SCOTUS for getting us into the mess in the first place.
L
Everytime the Fed tightens they take dollars out of circulation. Trump needs rate cuts to put more dollars into circulation to fuel the expansion of our economy.
You’re free disagree with me and President Trump. We can’t force you to be right.
Amazing how cutting the living hell out of Government spending, programs and entitlements are never on the table!
The Fed has been a major cause of every recession since it was created...then it “saves the world” by semi-correcting the screw ups...and when they start to work, it immediately begins the process of slowing things down again...Trump wants them to not have such freedom to screw with things.
The Fed’s only job should be to adjust the money supply to match increases/decreases in population with 0% inflation. Not to be Wall Street’s lapdog/savior. The “race to zero” is a sign of very bad times ahead.
I am not disagreeing with you, Moonman62, but everyone on this thread is missing something: Some of the “big states” (CA, NY, and IL in particular) as well as some smaller ones are doing quite a few things that work against President Trump’s efforts to grow the economy. IL is not as big as CA and NY, of course, but it may be the biggest and earliest train wreck, also exhibiting the biggest recent change in direction: The Governor (Pritzker) and the supermajority Dems in both Houses are simply insane, raising fees all over the place by 50% and 100%, a progressive income tax is surely coming (adding to an already grievous exodus of upper middle-class and upper class income taxpayers), sales taxes recently went back up, all sorts of new economy-unfriendly laws and regs are being put in place in a business-unfriendly state in the 1st place... and IL simply does not have anything like CA’s tech industry, or NY’s financial sector, or a healthy energy industry to bolster it. I don’t know how much of a drag IL will be on the national economy, how soon, but add in some of those other states going crazy lib too, and ripple effects, and I can easily see a full percentage point loss in US GDP. Then factor in a soft global economy, and the likelihood that President Trump has likely shot most of his ammo (tax cuts, cutting of regs) to keep things in high gear.
Additionally there is the “normal” (eh?) business cycle to consider, and trade dispute effects, both direct and indirect. I argue that the trade effects are not more than a few negative tenths of a % of GDP at present, and as such are an acceptable cost of fixing a long term problem, but I do not write them off entirely, either.
However, I digress if I go further into THAT.
Overall, I think we (the US) can kick the can down the road a good while IF we can keep GDP growth above 3% (with almost all that growth in the private sector), but last quarter was not encouraging. Are all the above taking their toll?
A downturn that takes out Pres. Trump in 2020 could, no, would result in damage beyond itself (governance, culture) that might take generations to repair, if ever, IMO.
The Fed hasn't "printed more money" since QE ended in October 2014.
YTD, they've "unprinted" $261 billion.
Additionally there is the “normal” (eh?) business cycle to consider,
...
I think the business cycle is caused by the Federal Reserve manipulating interest rates and is analogous to pilot induced oscillation.
https://en.wikipedia.org/wiki/Pilot-induced_oscillation
Wages have been stagnant for more than a decade it will take far more than 2 years for them to catch up.
The reality is there is closer to 2 decades of pent up economic growth that is finally being unleashed.
It will take more than 2 years for that to happen.
When you are already speeding down hill, you do not peddle even more feverishly, for there is little need and it increases the likelihood you will just crash.
The economy, wages, employment, business revenue and investment are all doing well, and somewhat resulting from different actions already taken by government and the fed.
The economy is in no need of more fuel from the Fed at this time. That fuel WILL make for a bubble somewhere. That bubble will burst and could bring the economy down with it like the housing bubble did in 2008.
Not much chance of that. Open all the valves now!!!
“Wages have been stagnant for more than a decade it will take far more than 2 years for them to catch up.”
There is no way for the fed to direct where in the economy will flow the result of its lower interest rates. There is nothing that demonstrates wages will increase because of it. BUT generally lower interest rates WILL make borrowing easier, which will boost mortgage lending, which will boost housing prices, which fist time home buyers do not need. EVERYTHING that easier money (too easy) gives with one hand, it takes with another.
Lower interest rates also hurt all forms of fixed interest savings, and fixed interest debt instruments, which tends to push investors to stocks, which tends to push stock markets into over-valued positions. Meanwhile mom and pop get zilch from their savings accounts.
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