Danielle DiMartino Booth claims the Fed should be cutting more, not less. I have a different suggestion.
Fed Needs Bigger Rate Cut Cycle, Concerns of ‘Back-Peddling’
Danielle DiMartino Booth says Fed Needs Bigger Rate Cut Cycle, Concerns of ‘Back-Peddling’
Danielle DiMartino Booth says the Fed’s rate cut projections aren’t strong enough, warning the FOMC will “eat its word” after touting a strong economy. She argues the job market doesn’t show as rosy of a picture as Jerome Powell paints.
I some sympathy for a part of that, a lot of sympathy for another part, an no sympathy at all for one part.
I strongly agree with Booth on the jobs picture. Heck, I have pretty much been leading the way in my posts.
Regarding the economy, I called for recession in May or June. Without some serious revisions we are looking at 2025.
But Booth thought it began in October of 2023 and to that I repeatedly said no. I joined the recession club in May.
“The Fed Will Eat Its Word”
Yep, but when? More importantly how?
Q: Is there zero chance Trump does not set off another round of inflation causing the Fed to hike?
A: No
What is the Inflation Outlook?
- Powell Doesn’t Know
- Booth Doesn’t Know
- I Don’t Know
- Because Nobody Knows
Inflation has been much more stubborn than Booth has figured since October 2023.
While I have also predicted a recession, but 7 months later than Booth, I have also been very concerned about what Trump might do.
And I am also very concerned about noneconomic indicators like “Fartcoin” have to say about speculation.
In the last year, Fartcoin has gone from nearly zero to $1.25. The entire stock market is going crazy.
Rampant speculation is a sign of monetary policy that is too loose.
Reflections on the Fed
- The Fed looks like a pack of idiots because they are a pack of idiots.
- QE to infinity froze the housing market. And it’s been frozen for a few years.
- The Bernanke Fed denied a housing recession even after it started.
- The Powell Fed somehow did not understand that three rounds of the most massive fiscal stimulus in history coupled with interest rates at zero and QE would cause inflation.
- How many times did these clowns use the word “transitory”
And now the Fed has reversed again.
Q: Why did the Fed cut in December?
A: Because its silly forward guidance said it would.
Sorry Danielle, there is no other reason.
So no, the Fed should not be promising more cuts, because it ought to shut its mouth and not pontificate on what’s ahead.
A Hawkish Fed Projects More Inflation, Fewer Interest Rate Cuts in 2025
On December 18, I commented A Hawkish Fed Projects More Inflation, Fewer Interest Rate Cuts in 2025
This Fed does not follow the data, does not serve the public, and has singlehandedly destroyed the housing market with an unwise mix of QE to infinity and rate cutting madness.
Higher inflation expectations coupled with today’s interest rate cut makes little sense. Nonetheless, the Fed cut rates today with only one dissent.
Galling FOMC Statement
Here’s some galling drivel from the Fed …
Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions.
Mercy!
What self-serving nonsense, necessitated by its reversal.
Two Recession Indicators, What Do They Say Now?
Yesterday, I noted Two Recession Indicators, What Do They Say Now?
A pair of very reliable Indicators still suggest recession.
But will it be a stagflation recession with higher interest rates or will it be a deflationary recession?
How about no recession at all with Trump blasting inflation higher until the Fed acts to force one? All of the above are possible outcomes.
The Fed projects years ahead when the Fed cannot even see three months ahead.
The result is more speculation and front running of what the Fed says (despite the fact the Fed is clueless).
My Strong Suggestion
Dear Fed, STFU already with your foolish forward guidance.
Then when you do whatever stupid thing you want instead of following the data (like you claim you do), you won’t look so ridiculous.
Regarding Jobs
June 6, 2024: How Much Does the BLS Overstate Monthly Jobs? Here’s the Answer
November 20: Quarterly QCEW Data Provides More Evidence of BLS Jobs Overstatement
Hard evidence from QCEW report suggests more negative revisions coming for BLS nonfarm payroll report.
However, that does not guarantee anything specific about inflation, as the Fed found out, and I have been saying for months.
Without forward guidance the Fed would loose its public pretense of control over the free market.
Cathy O’Neil, who wrote an article “Working with Larry Summers”, called the free market a functional and robust financial system because it’s self healing and self regulating. Which denotes recessions. The Fed feigns to control this economic hardship by generously spreading its magic liquidity dust. This led the way to the Fed’s 10-year ZIRP/NIRP experiment. Larry Summers presented the concept under the name of Secular Stagnation Theory to the IMF in November 2013. Summers was Obama’s first choice for Fed Chairman, but the Dems replaced him with Janet Yellen. She executed the plan in 2014.
The blueprint for the Fed liquidity is iterated in a March 25, 2016 Time.com article, “What is Secular Stagnation”. Which explains problems the economy now faces. Inflation, lack of affordable housing, immigration, consumer debt, and the pursuit of the next technological revolution.
Some countries took ZIRP/NIRP in earnest and dropped actual rates below zero. Some built out infrastructure, developed electric power. While the Fed used the decade to rebuild bank accounts of the wealthy, that were diminished during the mortgage crisis.
Larry Summers’ modus operandi is to present a thesis followed by a cover-his-rear caveat. In the Time.com article, Summers said, “If the Fed took real interest rates to historical lows (which they did during the last decade), could create a host of adverse consequences, ranging from dangerous financial schemes to more asset bubbles like housing booms that end with excruciating busts.”
CMOs were the dangerous financial schemes that developed before the 2007 mortgage crisis, when Greenspan kept long-rates too low for too long. Now, it’s digital currency scams, as current yields for 10-year Treasuries are only slightly above Greenspan’s lowest rates. A few months ago, 10-year yields fell again to Greenspan’s lows.
How about we leave the rate where it is and end the Fed.
Absolutely to ending the Fed. Their monetization of Republican and Democrats horrendous debt spending has been a cancer on America that most have not yet realized but will eventually be unable to hide. But let the free market determine rates, no setting.
Fed needs to be permanently shut-up. Demolish the Fed.
Somehow Irving Fisher got debunked, probably on Milton Friedman’s license plate. The transaction’s velocity of funds was turned into the income velocity of funds. The old guard Fed economists have retired. The Keynesian inspired disciples don’t know the difference between money and liquid assets. Nothing’s changed since 1913.
The 2 year rate-of-change in our “means-of-payment” money supply hit a bottom in August. It will rise in 2025. Ergo, that now portends that inflation will be slightly higher.
He correctly predicted the situation with today’s democrats and liberals. The MAGA movement is the antithesis of this.
No one seems to agree even on what the data says because the data is garbage.
The eyeball test says no recession. Travel around and you won’t feel any recession. Planes are full, restaurants are hopping and retail traffic is back to what it was precovid.
Things can seem somewhat stable but there are warning signs of the greater problems ahead caused by the Republicans and Democrats horrendous debt, currently at ~$107,000 per US citizen and rising.
Yeah, so I watch a good deal of these economics jawflappers on Youtube, but less and less. It’s a cottage industry where they have each other on their channels, prognosticating things that have not happened, and may never happen. They seem to cater to base doomsterism. Some make more of their God-given appealing assets than others, but frankly, they are all a waste of time, like surfing porn, or so I’ve been told.
The fed and its sycophants always make sure to say that inflation is supposedly caused by consumers buying too much or by too much employment. They never mention their own root cause of excessive currency creation. University economics departments have been called out as hiring only fed compliant economists. Media reporters interview them and their theories and presto more propaganda..
It is nearly QUAINT now to think that the Federal Government and the FED are actually telling us anything that is not intended to deceive us and the COVID MASKING Psy-Op is a perfect example of UNSCIENTIFIC reasoning being “masked” as Science.
Do you all remember the pedantic and condescending statement, “FOLLOW THE SCIENCE.”
It was SOOOO in our faces inanity. I researched MASKING to prevent the spread of molecules the size of all airborne viruses and ALL of that work produced a 100% finding that masking CANNOT WORK as promised. It was NOT SCIENCE.
It was all lies!
They’re all lying to you!!!
When people seem “stubborn stupid” then it is ALMOST ALWAYS PURPOSEFULLY STUPID. In other words, they are LYING!
“The Fed projects years ahead when the Fed cannot even see three months ahead.”
Corrected:
“The Fed projects years ahead when the Fed cannot even see today.”
The word, “Cannot” should be likely replaced with two words, “WILL NOT.”
Cutting rates isn’t stimulative. The bond vigilantes raise long term rates and short term interest income for the seniors decline. Powell now says it may take until 2027 to reach their 2% percent goal(which is 4-5% inflation on the street). The vast majority of the public doesn’t understand that the Fed is largely responsible for inflation. Maybe if they screw up again the public will protest enough with pitchforks to help end the Fed.
“Q: Is there zero chance Trump does not set off another round of inflation causing the Fed to hike?”
Reworded: Is there a 50/50 chance Trump creates higher inflation that at this point in time NOBODY can predict how large or small it MIGHT be?
A: MAYBE
Let’s get Trump into office first and let him start making EOs before we assume he’s going to do things like tariffs & MASS deportations that will cause inflation to SPIKE. While his policy decisions MAY cause some inflation, there are bigger picture goals in mind for the economy.
And here’s a really salient point: With our enormous debt that continues to grow by leaps & bounds, creating every higher interest expense, WE ARE IN AN INFLATION INCREASING CYCLE. It’s that simple, and there’s a very good chance that the Fed is simply underestimating what we can reasonably expect CPI, core PCE & PCE inflation to be over the next 5 years. The only path to lower inflation from here is a recession.
Quick question: How does moving your recession call from Oct 2023 to May 2024 any different from Booth, if we’re still 7 months gone without a recession? Most of us would agree that 2025 could bring a recession, but we’ve been saying that for at least 18 months with no dice, right?
Remember, inflation didn’t start to pick up until 2019 in his first term. What was going on then? Well, over the course of 2019, mortgage rates fell 120 basis points, which started the acceleration in home prices & inflation. Then we all know what happened in his last year. A six-week, government induced recession that saw housing prices roar higher as the fed cut the FFR to .25% and started gobbling up MBS.
This time around, we’ve got higher for longer interest rates, so housing is either going to mostly continue to flatline or continue down in some markets with declines spreading more broadly if the labor market holds up. 4W Moving Average of initial claims is 225K and continuing claims are still below 1.9M.
There’s a decent chance you and Booth are wrong, at least in terms of employment, for 2025. And since illegal immigration is known to have been lowering wages & raising unemployment, wouldn’t it be awesome if Trump deported about 1M illegals in his first year, and this caused wages & employment rise?
Cheers!
With the amount of money that the who knows how many (a lot) supposed experts at the Fed get paid, they have no excuse for *repeatedly over generations* underestimating anything. They’re purposefully, willfully doing a terrible job and should’ve been shut down a long time ago.
– In the last year, Fartcoin has gone from nearly zero to $1.25. The entire stock market is going crazy.
> There is no legitimate reason to invest in such a coin, unless you have money to burn. It’s not even a real thing, but rather a gimmick to get people to glob onto, and then take their money.
– Rampant speculation is a sign of monetary policy that is too loose.
> Hence the Term: “Fools Rush In”
Reflections on the Fed:
– The Fed looks like a pack of idiots because they are a pack of idiots. > 100% Agree! Are they not supposed to be, for their current purpose anyway?
– QE to infinity froze the housing market. And it’s been frozen for a few years. > Weather looks freezing for awhile, so let’s expect a few more…
– The Bernanke Fed denied a housing recession even after it started. > I try to forget that time, as it was costly.
– The Powell Fed somehow did not understand that three rounds of the most massive fiscal stimulus in history coupled with interest rates at zero and QE would cause inflation. > They totally understood, but we’re doing what they were told to do.
– How many times did these clowns use the word “transitory” > I believe they are still thinking and using the word. They are either just simply dumb, and don’t know what the word actually means, or playing us as they so do. I go for the latter… Using the “KISS Theory” is extremely beneficial, when wanting to figure out what they are doing. Why is much more difficult, because you have to get inside there way of thinking, and that’s damn near impossible!!! More Cuts are inevitable with this group, boy it will be nice to see when things change eventually, by Whomever and Whenever at this point…
I agree. With what’s soon to be $37T in debt, rising close to $2T a year with interest expense headed towards $1.2T, we’re undeniably in a rising inflationary cycle. Trump won the election on 11/5 and the Fed has now cut rates twice, knowing there’s a better than not chance that his policies are going to add inflation into the system. To what extent & how quickly is certainly up for debate, but yet the Fed cut another 50-BP anyway. Now, you’ve got a divergent long-term bond market, and everyone seems to be surprised this is happening. It’s almost as if the Fed has cut three more times to try to convince everyone that the 50-BP bazooka cut in Sept wasn’t politically motivated. Well, it’s not working.
Precisely! I wasn’t buying it then, and as such, especially not now! The Government aligned with the MSM, has become a joke, but unlike the MSM, We can’t just fire them!!
The solution to this problem is to exclude more items being measured. They don’t count food or energy in “core” inflation, so why not throw a few more things out until they get the number they want?
The thing is the Fed could easily forecast economic conditions if it paid attention to the right data. The problem is they keep using economic models from the 1950s and can’t seem to adapt.
When people here were saying inflation was “transitory” years ago, there were people saying it wasn’t so for one reason: demographics. You can’t have an economy with 1/3 of the population sitting around collecting free money and health care and not have it blow up inflation.
And it will only get worse if you kick out the millions of slave laborers that have been doing work for pennies on the dollar at all the crap jobs no one wants to do.
Throw in tariffs and Trump volatility wild cards and I can guarantee you that inflation will be bad. The only thing to argue about right now is if inflation will be bad or really bad or horribly bad.
The fed should be hiking and the time to start hiking will be immediately after Trump issues his first tariffs and deports his first 1000 migrants via bus or plane. That’s the key turning point that inflation will start blowing up again.
Inflation IS the tax being paid for the “free” health care and other stuff you allude to. But the US public (since before the Revolution, with the exception of some folks in the postwar era) will not pay much of anything that calls itself a tax.
“Throw in tariffs and Trump volatility wild cards and I can guarantee you that inflation will be bad. The only thing to argue about right now is if inflation will be bad or really bad or horribly bad.”
And the $36.3T in debt will have nothing to do with bad or really bad inflation?
Let’s save the guarantees until Trump’s actually in office and we see what flurry of EO he does in his first 30 days. At that point, a guarantee seems more reasonable.
The Fed should just do a public coin flipping: heads they cut 1/2%, tails they raise 1/2%. Do that every month or two and see what happens.
Trump threatens to retake Panama CanalThe U.S. ceded control of the canal to Panama in 1999 pursuant to a Carter administration treaty
Great another debt we will incur
The canal is out of date and needs copious amounts of money to upkeep upgrade maintain
Deep breathing
The canal can act as a southern border wall.
That alone would reduce entitlements for no show illegals.
We need to assimilate Mexico into the USA and divide it up into states. That eliminates most of the illegal workers because the Mexicans will now be USA citizens. Texas can go back to being Texas and not worry about the border any longer.
And the border between current Mexico, Guatemala and Belize is a lot shorter and easier to build a wall along than the current Mexico/USA border.
The current administration “Sold The Wall” so we have nothing to build it with. The wealthy donors will control the selling and to whom and when, so no new wall parts coming as there is a transition time as to when they will become available.
I think I may have heard In 4 Years they may have some steel available to get and we will be welcome to it then, but no guarantees, due to the transition and all…
Housing isn’t proportionally accounted for in inflation figure. Everything else is just a baloney, but…but someone has to project supreme confidence.
I asked Grok to count JPow’s uses of “transitory” in official statements/PRs. Doesn’t include informal Q&A. Roughly monthly … he then retired it late 2021.
Response: Total mentions of “transitory” in 2021 by Jerome Powell across his speeches, statements, and press conferences: 11 times.
This country will probably survive for our children to see it in adulthood, likely not our grandchildren.
The people in charge are going to continue spending and expanding until they can’t anymore, and since that will be the same day the EBT cards stop working, we’ll have much bigger problems than holding them accountable, not that most people can or would want to hold them accountable.
Probably the best we can hope for is to be a warning for future generations sifting through the ashes of the United States, but we aren’t the first empire to collapse under the weight of a decadent and corrupt elite class and the ignorant people who support them, and we won’t be the last, either.
Best way to “shut someone up” is put them down. EtF. (End-the-Fed)
Fartcoin is a store of value sir.
That’s just “HotAir”
It’s not even air. Air is valuable. Heat is valuable. This just squanders attention. Oh, and “fiat money.”
Yep!