Posted on 06/15/2022 11:11:58 AM PDT by Mariner
The Federal Reserve’s missteps in waiting too long to tackle the greatest run-up in prices in four decades has shaken trust across markets and the American public that it is up to the task of curbing inflation.
On the eve of a high-stakes Fed policy announcement, investors, economists and policymakers were on edge over how sharply the Fed would raise interest rates to deal with inflation, which hit a new peak in May.
Financial market volatility and losses deepened on Tuesday, fueled by fears that the Fed continues to misjudge inflation and will come down too hard on the economy, prompting a recession. The S&P 500 has fallen into bear market territory — a 20 percent fall from the most recent high — and all the indexes have accelerated losses for the year.
Even more concerning are new signs that families have lost faith in the Fed’s policies. Consumer sentiment in June sank to a low not seen since the 1980 recession, according to a University of Michigan survey. Similarly, a poll by The Washington Post and George Mason University’s Schar School of Policy and Government found that most Americans expect inflation to worsen and are adjusting their spending habits, a mind-set that can make the surge in prices even worse.
Fed policymakers were already under enormous pressure to slash inflation without inviting disaster for the recovery or spurring a new round of job losses. Now, the Fed is in an even more fraught position, one that goes beyond monetary policy and instead targets the Fed’s most essential tool of all: its credibility.
“It’s very difficult to regain credibility after you’ve lost it,” said Chris Rupkey, chief economist at the research firm FWDBonds.
(Excerpt) Read more at msn.com ...
1. Remove all sanctions on Russia
2. Remove all restrictions on domestic energy production
Hike the Fed Funds rate to 1% overnight, and continue with 1% increases every meeting for the next 10 meetings, and dump $3trillion of their asset book over the next 6 months. The remainder over the follow 1 year.
Yeah, a catastrophic prescription. But that's what it will take.
DJIA
30,482.77
▲ 117.94 (0.39%)
June 15, 2:21 PM EDT · Market Open
This isn't the early '80s. Cuts are going to need to be made to government spending. Given $40 billion was laundered through Ukraine with the blessings of both parties in Congress, its unlikely.
Rand Paul has been talking the Penny Plan again. I like the idea, but good luck with that.
It's now the 6 penny plan to balance in 5 years.
But as we all know, nothing will happen. Hopefully my time on this earth will have ended when the SHTF.
The only will in Washington is the will to survive until everyone else is dead.
Our current idiotic govt can’t “handle” anything.
Everything they “handle” turns to a steaming pile of excrement.
Kinda shows what they have for brains
Well, this is a problem with an economy based on “faith”, which is what our is based on. Faith in a baseless currency, faith in the stability of inherently unstable markets, and faith in the honesty of dishonest politicians.
When you put your faith in such things, you are bound to eventually lose that faith, and then the whole house of cards comes crashing down.
“Only three things will end this inflation ...”
It will eventually get ended or whatever but its causes were decisions made many months ago.
Hopefully we citizens will learn from this experience what to not do in the future.
“Markets and households lose faith that Fed can handle inflation”
as well as they should ...
A large part of this inflation isn’t related to monetary policy, but energy policy. The relative unavailability of energy can mimic the monetary kind, since the cost of everything is related to the price of energy.
right now, stuff mainly costs more NOT because there’s too much money (there is, but the CryptoTulip crash is taking care of THAT excess), but because energy is the primary input into everything that makes up modern living, including resource extraction, resource refining, manufacturing, transportation, farming, fertilizer and agricultural chemicals, food preservation, medical care, communications and telecommunications, computing, internet, online commerce, construction and construction materials, clothing, and heating and cooling ...
dementia joe’s energy policies have been DELIBERATELY designed to curtail domestic energy production, driving energy prices through the roof, thus making EVERYTHING cost more ....
monetary policy can NOT fix the energy shortage, and thus is the wrong remedy for the wrong problem, and the Fed is fighting the previous inflation war ... however, raising interest rates WILL crash the economy, which is exactly what is going to happen now ...
[btw, even a well-meaning moron will make the correct decision 50% of the time simply by flipping a coin, but since dementia joe and his minions are nearly 100% wrong all the time, it HAS to be deliberate!]
Markets and households know that fiscal policy has been the problem all along and monetary policy is just it’s corrupt co-dependent. Congress gets no pushback when they hand out borrowed money when the majority of the electorate pays little or no taxes, yet receives benefits. Until we create a link between paying and governing, we’re doomed.
The reason it took so long is because it required them to admit they were wrong and that’s one thing these egos never want to do is admit they were wrong so they hem and they has about and do anything they possibly can not to have to say that they were wrong and in the meantime it gets to be to a point where it’s too late to fix it.
Learn? Never, never enough. Most of this electorate are stupid and even proud of it.
I’ll gladly suffer second degree burns for biden and the fools who voted for him to get third degree or much worse. I can endure a lot.
“Most of this electorate are stupid and even proud of it.”
I think it’s more that they’re not that interested in politics and thus are not as “informed” as some of us. Many who are informed listen to lies and so are worse off than being ignorant.
With this article, the Compost is deflecting blame from Biden and directing it to the Federal Reserve.
The article supposes the Fed could overcome the disaster that is the Biden economy
15% across the board import tariff. A 25% tariff on imported crude oil.
Drill baby, drill
Cut income tax rates 1% and raise fed funds rate 1%. Do it every year for 4 years.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.