The overwhelming answer by economists to the opening question is yes. Your mileage may vary.
Short-Term Opportunity for the Fed
The Fed has an opportunity and an excuse under its dual mandate to cut rates.
And it will because the Fed has shifted its mandate preference from inflation fighting to supporting jobs.
Then What?
Deficits are massive, tariff hikes are inflationary, just-in-time manufacturing has been replaced by just-in-case stockpiling, demographics puts upward pressure on wages while dramatically increasing the need for Medicare, and both Trump and Biden want production in the US.
Every point in the preceding paragraph is inflationary.
Understanding the Dual Mandate
July 31: Fed is Attentive to the Risks to Both Sides of its Dual Mandate
The Fed is concerned about inflation and jobs. It’s the latter that will be the bigger problem in the near-term.
August 23: Fed Does Not Seek or Welcome Further Labor Market Cooling
The market is cheering the Jerome Powell’s self congratulatory and market friendly speech at Jackson Hole. “Your mileage may vary,” said Powell. Indeed.
Undoubtedly, “Your mileage may vary,” is the most accurate thing Powell said today.
Two Fed studies have debunked the myth of inflation expectations, and so does common sense. ….
September 6: Payroll Report: Manufacturing Sheds 24,000 Jobs, Government Adds 24,000, Big Negative Revisions
Full Time Employment is -1,021,000 from a year ago!
September 7: BLS Negative Job Revisions 15 of Last 21 Months
Let’s recap negative job revisions and also discuss a reader comment “This was not a poor nonfarm payroll report.”
Reflections on the Dual Mandate
I do not believe there should be a dual mandate.
Heck, I don’t think there should be a Fed. Nor do I think a goal of 2 percent inflation is a good idea, even if accurately measured.
But I didn’t create the mandate, Congress did. And that mandate gives the Fed cover to do whatever it wants.
Looking Ahead
Underlying inflation pressures are huge. Given neither party’s willingness to do anything to fix out of control spending, it’s the recent decline in the rate of inflation that’s transitory, not the increase in inflation.
It’s not a pretty picture no matter who wins.
Quite frankly, the economy *needs* some economic pain in the form of *real* job losses. The Fed is cutting too early. Nothing could be further from real job losses than 4.2% unemployment. People need to snap out of their manic euphoria, and stop living overextended lifestyles. Passing a 6% unemployment threshold *might* do that. Hovering around 4.2% unemploymest at the start of a series of rate cuts certainly won’t. Yes, prices have dropped 1 or 2% in some categories, but this is after a 20% to 30% runup in just two years, which psople (on wallstreet and at the Fed) are somehow ignoring.
Lael Brainard, May 22, 2017 –
“Fulfilling its dual mandate, the FOMC set a target of 2 percent for inflation but does not have a similarly fixed numerical goal for maximum employment. Because the level of maximum employment depends on non-monetary factors that affect the structure and dynamics of the labor market”.
Brainard goes on to say (edited)
“Inclusion is an enduring goal of public policy that is embodied in our maximum-employment mandate. Unemployment rates for African Americans and Hispanics remain higher than the national average. We can also see persistent disparities by gender, the well-known wage premium earned by men relative to women with similar experience and expertise. With its focus on inclusive growth, the Fed’s DEI Institute could give us important insights on how far the overall economy is from full employment.”
(The dual mandate declares interest rates are set by bureaucratic fiat not by fact. Powell ended balance sheet reduction in 2018, even though help wanted signs were outside restaurants, grocery markets and post office. Long-rates were cut by 45 percent in 2019 and inflation took off, a year before the pandemic.)
https://www.federalreserve.gov/newsevents/speech/brainard20170522a.htm
about to allocate paycheck to gold (100%)
The 2% rate (1/2 or 99% of Mandate, employment does not matter to them because they can CONCOCT the numbers) is CRIMINAL in and of itself.
2% guarantees that we pay 20% more for everything every ten years. CRIMINAL! WE OF COURSE KNOW that it is AT LEAST 4 times that amount RIGHT NOW! IT IS STICKY AND COMPOUNDS, like interest does.
SHOULD WE ALL BE SICK TO DEATH OF THIS BULLSHIT? Or just we lil’ folk?
22% more every 10y and that’s only if they actually meet the fake target… which often they don’t
Link: “The 2006 Financial Services Regulatory Relief Act gives the Fed permission to pay interest on reserves. The IOR rate was always higher than “the general level of short-term interest rates” which is imposed in the Law. “A Legal Barrier to Higher Interest Rates,” The Wall Street Journal, Sept. 28, p. A13.
This creates a monetary policy blunder or non-bank dis-intermediation. It destroys money velocity. It reduces N-gDp (overall incomes).
The economy is being run in reverse.
Lending/investing by the DFIs (deposit taking, money creating, financial institutions) expands both the volume and the velocity of new money. Lending by the NBFIs (non-bank financial institutions), increases the turnover of existing deposits (a transfer of ownership), within the commercial banking system.
Economist John O’Donnell in 1961 said of the U.S. Golden Era in Economics: “increased money velocity financed about two-thirds of a growing GNP, while the increase in the actual quantity of money has finance only one-third.” In other words, the ratio of the money supply to GNP fell.
Banks don’t lend deposits. Deposits are the result of lending/investing.
How Banks Create Money Out of NOTHING – Richard Werner (youtube.com)
“The riddle of money, finally solved” — by PHILIP GEORGE
http://www.philipji.com/riddle-of-money/
“Banks don’t lend deposits. Deposits are the result of lending/investing.”
Correct
I have been discussing this for two decades
It’s a minority viewpoint. And it has profound implications. Banks as a system, pay for the deposits that they collectively already own.
The source of time deposits (savings-investment type accounts), is other bank deposits, directly or indirectly via the currency route or through the DFI’s undivided profits accounts.
And savings flowing through the nonbanks never leaves the payment’s system. The DIDMCA of March 31st 1980 turned the thrifts into banks.
As Dr. Leland James Pritchard wrote: “Consequently, if this Act (the DIDMCA) is not revised so that the Fed can get a direct grip on the volume of legal reserves of all these institutions (note that legal reserve requirements were reduced by 40 percent in 1990-1991 and legal reserves became unbound in c. 1995), and if the Fed does not “clean up” its discount window operations so that advances are not used by borrower to finance credit expansion—if these caveats are not observed—then this country will experience a truly disastrous inflation”. And thus, the GFC came to pass.
The bond market is forcing the FED to lower rates. Since the bond market leads FED actions over 95% of the time, both the FED and inflation targets are unnecessary.
the FED is unnecessary for 99.99% of us. but for the owners of the FED, they are willing to do anything including blowing up the world for that free access to the discount window……………via the primary dealers and the actual owners of the NYFED.
I disagree. It is the opposite of what you say. The bond investors have adjusted forward rates based on what they believe the fed has signaled it is going to do.
the reality is fed has only one mandate. it’s really not that complicated if one reads history of all the central banks the usa has had. or just go read the history of who created the modern and 3rd usa central bank. the mandate is simple. their owners know. seems like they might be the only ones. and a few of us who live and work with and close to the Federal Reserve Bank of NY where all the action happens.
What we are really saying is that…Oh well we all know the Fed shouldn’t be cutting rates and that it is bad for the country but its okay because the Fed has a dual mandate so its okay to switch it up because they have cover to do so. Well no it isn’t. U3 employment at 4.2% is at historic tights. Job quits are just fine. Inflation in core services (as well as other areas) is still hotter than what the Fed is comfortable with. So we are comfortable giving the Fed a pass to do what is bad for the country and the economy but good for Harris or the Democratic party which has done a shamefully inadequate job on the econoy? Well I for one am not comfortable with this at all. If the Fed wishes to back a political party rather than the country then the Fed clearly doesn’t really care about the welfare of the American people. That is unconscionable. If the Fed is not impartial then that because a real reason to dramatically curtail its influence.
NO. Inflation should be there only mandate. Cutting rates is just gonna make inflation worse.
“Lower inflation is transitory” – yes, but we are in a “new economic scenario” where natural disasters are rising rapidly, lead to losses in crops (cocoa beans, anyone?) and escalating insurance premiums.
https://www.rba.gov.au/speeches/2022/sp-so-2022-08-24.html
https://www.rba.gov.au/speeches/2023/sp-dg-2023-08-29.html
https://www.rba.gov.au/speeches/2023/images/sp-dg-2023-08-29-graph08.svg
https://www.rba.gov.au/speeches/2022/sp-gov-2022-11-22.html
https://www.rba.gov.au/speeches/2022/images/sp-gov-2022-11-22-graph07.svg
This is the new normal. The only question is timing (sooner, rather than later?).
We need to start adapting to a high-energy-cost economy now. That means, find low cost energy sources ASAP (large scale battery storage, nuclear, fusion, geothermal, even potentially gas). Getting solar panels and batteries into the market in a cost effective way will lessen household power bills, if we can find the most cost effective way to do it.
The simple answer is NO. Employment remains fairly buoyant at 4.2% which is still very low. 4-week unemployment claims are @ 230K which is still very low. However, the Fed will cut rates for three reasons, in order of importance:
Start to lower the cost of government borrowingRe-enforce their view that inflation has not plateaued and will not rise next spring (We will see how that assumption plays out)Politically motivated attempt to help Harris
Your “Politically motivated attempt to help Harris” could also be interpreted as ‘protect the world from another Trump Presidential term’.
Sure. Either way, it’s the Fed being political which they’re not supposed to be, Jojo.
Since I want to take advantage of the opportunities that present themselves, I do not concern myself with thinking about what the Fed “could” or “should” do. Rather I consider what they “will” do. And right now they are telling us that they will be starting to lower rates.
As I own a substantial amount of Canadian oil and gas stocks, I also keep an eye on the Bank of Canada, which has had three consecutive 1/4 point rate decreases so far and telegraphing more to come. Whether the Fed does 1/4 or 1/2 point decreases does not matter to me or to most of the companies I am invested in. The important thing is that rates are coming down over the next few years.
the currency conversion is the only thing that matters………for cross border investing and rates……..and with USD and CAD heading in the same direction it doesn’t matter you are correct. i like periods where they are diverting. i’ve been an investor in CAD headquartered companies for decades. my all time best years in 50 years of trading was the crackup boom in CAD based weed companies in 2015 to 2018. holy crap that was wonderfully fun. i increased my trading account 10x. i was living in the SF bay area and felt like the SV young boys who talk in terms of 10x and 50x on their investments…………i did do one VC deal that returned 200x on a pittance but what a rocket ship that was.
* Platform claimed Trump’s term spurred “historic economic growth, job creation, and resurgence in American manufacturing”. Would it surprise you that NONE of that was true?
* GDP during Trump admin was +2.24%, +2.95%, +2.29%, -2.77%, which are virtually the SAME numbers as during the Obama admin.
* Same with job creation, and that’s NOT blaming COVID job loss on Trump either. Remember, unemployment was over 8% when Trump left office (and he didn’t want to go either!)
* There was no resurgence of manufacturing either. It’s been flickering between +2% and -2% for multiple administrations, except during 2020 when it hit -9%.
* It was Trump that killed the bipartisan border control bill, so he can keep it a talking point during the election. Some GOP reps and senators wanted to sign, but was told either by Trump or Trump-associated “influencers” that if you become a collaborator your GOP political career will be over.
* The often-GOP-repeated “8 million illegals have crossed the border” was total bunk. They were citing DHS arrest records, which would have counted multiple attempts by same person, but also counts people who have been detained in border “camps” awaiting processing by immigration court (legally, they’re NOT in the US, but in limbo).
Obama and Biden also deported more illegals than Trump.
And before the Trump acolytes retort that more illegals crossed the border during Biden than Trump, please recall that the Trump Administration didn’t face the onslaught of illegals due to Covid, worst economic conditions in China, Venezuela, Argentina, El Salvador, Cuba, Guatemala, etc.
It also needs to be discussed that at this juncture neither Mexico nor the US have control of their shared border. It is the cartels that determine the illegal flows.
If the US were serious about ameliorating the illegal immigration they would pass a law prohibitively fining employers for hiring illegals, followed up by imprisoning HR and facility executives after 2 violations and increase the fines, then after the 3rd violation the CEO and HR VP would be imprisoned, fined personally as well as the company. This action would significantly reduce the demand side of the problem. It would also raise wages, increase inflation, reduce output, cause a deep recession till work visas were expanded.
To resolve the supply side, the US needs longterm to change its Latin American foreign policy. In the short run the Congress and the President will need to subsidize Mexico paying partially or all of the tab for the Federales to control illegal flows into the US. When Mexico has effectively curtailed the flow it was due to the Federales interdiction programs. Local authorities in Mexico cannot standup to the cartels. It is a matter of resources and corruption.
It’s been complete open borders under Biden, folks are ‘detained’ in hotels where everything is paid for and they can come and go as they please.
i lived on the border for 13 years and i know my history. the border has been wide open for the past 400 years. in fact the borders have moved and the people stayed the same and vice versa. hired so many mexican men in my life it’s hard to count………AZ and CA were spain and mexico longer than they have been the USA. the border has been wide open forever. don’t be naive. or stay in that dream world………
Price rises are not inflation. Inflation requires credit expansion, as a prerequisite.
We are currently seeing concealed deflation, as credit contracts.
In addition to credit expansion, inflation needs there to be growth.
In addition to growth, inflation needs credit expansion to be faster than growth.
That’s how all those currency units chasing growth end up driving prices up – in an actual inflation scenario. That is not what is currently happening at all.
Price rises in the current situation are price rises, either due to real scarcity, or artificial scarcity created by government policies.
We are currently seeing artificial scarcity created by government policies.
“demographics puts upward pressure on wages while dramatically increasing the need for Medicare, and both Trump and Biden want production in the US.”
…only if demographics results in growth, and expansion of credit faster than growth.
increased numbers of pensioners demanding more medical services is not inflation, it’s demand for scarce services.
onshoring of production could only be inflationary if there is an increase of credit to build facilities for onshore production and a growth in domestic jobs.
deficits are deficits… if you import more than you export, that’s not inflation, that’s demand, both domestic and foreign.
tariffs might increase domestic prices, but increased prices are not inflation, it’s artificially-created scarcity.
all of this is self-evident and obvious, yet people like Mish keep misusing the term “inflation” to describe every price rise.
They’re just wrong.
We are in a period of deflation that goes hand-in-hand with recession.
This notion that there is simultaneously “inflation” and recession is so nonsensical, it’s ridiculous and retarded; as ridiculous and retarded as the “moneyprinting” notion that people have; or that “BRICS” will displace the USD. All of these notions belong in the same dumpster of silly ideas.
mouse click currency creation can surely occur at the same time as many assets prices deflate……….read the book, this time it’s different to see all the scenarios over the past 800 years of financial disasters world wide. ti’s much more complicated than you or mish are spelling out. so many different ways to ruin. r/e collapse. stock. bond. currency, wars and many more………the book is the best. i recommend it for any serious women or men.
That’s called stagflation, business stagnation accompanied by inflation. And you forget dis-savings and velocity of circulation.
$1,000,000,000,000 for interest payments this year, 50% more next year, and how much the year after?
Yeah, the Fed’s GOT to cut rates, even if it leads to more inflation and more unemployment.
The alternative is to raise rates like crazy, and then have Treasury call in all old bonds, issue 0% 100-year bonds to replace them, and have the Fed buy every stinking one of them until the $35,000,000,000,000 vanishes.
Problem solved — apart from the certain death of Fed credibility…
That’s called monetizing the debt.
The reason is that to ‘call the bonds’ you have to pay them off (ie you can’t demand someone turn over the bond, you have to pay it off). Since the treasury doesn’t have 35 trillion in cash (if it did it would not need the bonds in the first place) it has to print (monetize) 35 trillion and hand it out. How do you think printing 35 trillion would go given what a fraction of that did to inflation during Covid?
it is mouse click currency. and all empires seem to go the same way, from the ussr to the spanish and french and roman empires. or look at the little wannabe empires like the 3rd reich……….
As I said: The only tool, credit control device, at the disposal of the monetary authority in a free capitalistic system through which the volume of money can be properly controlled is legal reserves. The FED will obviously, sometime in the future, lose control of the money stock. May 8, 2020. 10:38 AMLink
https://files.stlouisfed.org/files/htdocs/publications/review/2023/06/02/fiscal-dominance-and-the-return-of-zero-interest-bank-reserve-requirements.pdf
IF the FED cuts, they will be signaling that they wish to support Harris for President. After a cut, her campaign will immediately tout how the Biden administration is helping people purchase homes, purchase autos and pay less in credit card interest fees.
Sorry Trump.
Trump can easily counter and say that when he was president that interest rates were FAR lower than even after this rate cut so he was REALLY helping people purchase homes, autos etc and that if elected he’ll get rates back to that level.
See, it’s trivial to come up with a political argument to make whatever point you want.
Sure but only fools listen to Trump these days.
dick cheney, the great dimocrat, is a man up to the task of explaining it to repugs, too. the nitwits that haven’t figured out it is a uniparty war mongering empire are so confused. the red team v blue team jackoff contest at the fed level is silly. the only place that matters now is the state and local county and town level. the fed level is all one team.
The Fed also keeps its eye on global markets. China is in a property collapse driven severe deflationary spiral. While the Wilshire is within 1 percent of its 16 July 2024 peak and about 125% above its March 2000 low, the Shanghai composite is now within 2 percent of its March 2020 low which will likely be breached within the next two trading days. The Wilshire and other global bubble equity valuations, and crypto and commodity valuations will to a significant extent catch up with the Shanghai comp over the next 16 trading days. Over the next year (and years to come) the US service economy replete with its social programs, military and QE deficit spending will initiate another credit cycle. With the world holding so many dollars, and one US boomer having more destructive capability than the summation of that witnessed in WWII, the US will still be in a position of the least worse of all contenders for the next half century.
“Nor do I think a goal of 2 percent inflation is a good idea, even if accurately measured.”
Would there be an inflation goal if money was not based on creating debt?
It all depends on what you consider inflation. One camp says it’s only a monetary event in which case that camp would say no. Another camp says inflation is not just a monetary event in which case the answer is yes.
inflation is clipping the gold and silver coins in siracusa so the greek empire that controlled sicily at the time could create more coins for the treasury by floating less silver and gold coins to the peasants. the past 2500 years hasn’t changed that definition. the cost of a meal and escort is another matter and might change with the weather for food products and the supply of escorts among the slaves……….
Only price increases generated by demand, irrespective of changes in supply, provide evidence of inflation. There must be an increase in aggregate monetary purchasing power, AD, which can come about only as a consequence of an increase in the volume and/or transactions’ velocity of money.
Just in time for half a year clogged our industries causing inflation. Just in 2/5 min satellites industries will supply chips and parts. Friedrich List,1848. An economic system to fight the British Empire. S. Korea adopted it. Trump imposed Tariffs. Biden knocked him Off. When our national industries will be ready in 2025 — protected by tariffs — demand for highly skilled workers will rise. Wages will rise. Taxes will fill gov coffer even with cutting tax rates and regulations. If the Fed cuts rates to ease debt payments along with higher tax collection ==> the gov will be able to cut debt. A good economy lift all workers. The Fed will protect jobs until inflation will threaten the recovery. The Fed will flip back to fighting inflation.
Did you even read what you wrote?
1) Tariffs (which are taxes) will create domestic industries
2) This will create demand for higher wage jobs in those industries
3) Which will raise tax income
4) Which somehow is a good economy that lifts all workers that is beneficial for the country.
It’s a circular definition. That taxes raises the economy which is beneficial for the country.
Why bother with tariffs at all? Just 100% ban imports entirely by putting a 1 million tariff on everything. That should create a panacea here in terms of high wages and higher taxes and a wonderful economy?
The reality is that the higher tariffs are going to cause a demand crash because everyone will be able to afford to buy *less* of the products which will mean all those businesses that come back onshore will face falling demand and either go out of business or have mass layoffs.
A good economy comes when you produce *more* for *less*.
1) When our national industries will be ready demand for highly skilled jobs will rise.
2) China can provide our needs, eliminating those factories, as they did it for 45 years.
3) In order to protect our national interest we have to raise tariffs on the most important things that keep us safe during a crisis or wars. China can win the war without shooting a bullet. We are not interested in producing shoes or undershirts domestically. The global trade cont. China became too expensive and too aggressive. We shifted production to cheaper and friendlier countries.
4) Higher demand, higher wages, etc, etc
YOU are insane. and quite ignorant of currency markets…….
Which industries are these that you speak of? Assembly line workers making cars, planes, or steel etc are not high skilled jobs. Unions may ensure high pay but they are not high skill.
Which industries are critical? All the defense industries are already made in America. Cars are not ‘national interest’ industries, nor is steel etc. If you believe the lie that they are, then you’ll believe the lie that everything is critical because every industry is going to claim they are.
Credit has become an economic drug. An addicted country equates their credit rating to cash in the bank. Credit stimulates excessive buying of things unaffordable and fuels inflation. Unfortunately our government is treating this problem as well as they have handled the homelessness problem. Eventually, the addict must suffer terrible consequences.
Credit is more of a symptom than the problem. The underlying problem was money printing and interest-rate manipulation (financial repression). The Fed (through QE) wasn’t issuing credit. It was purchasing assets providing windfall gains to the sellers of the bonds who took the proceeds and entered the stock and housing markets.
Combined with the extreme policy of zero-percent interest rates, it created a ferocious bidding force that drove asset prices to all-time highs. These policies also extended virtually unlimited credit to the government without the (normally) high corresponding interest rates.
It is important to understand how windfall gains are created with QE. Once the program is announced, the market immediately starts front-running the program (bidding up the price of the bonds).
We saw this acutely when the Fed announced the program to buy corporate bonds through an affiliate. The market did most of the work and the Fed had to purchase very little of the corporate bonds.
Thus, QE is providing a huge windfall gain to sellers of the bonds. When the bond holders sell to another investor, it is the investor who pays for the windfall gain.
When the bond holder sells to the Fed (via primary dealers), it is the printing press that pays for the windfall gain. In other words, the Fed is printing money and gifting it to well-connected investors by paying above free-market prices for the bonds.
The amount of the gain depends on the type of bond. T-Bills and shorter maturity bonds would be a smaller gain while longer term Treasuries and MBS would provide a larger windfall profit.
Many people will argue that the Fed needed to step in with all these monetary fireworks to keep the financial system from imploding. This is why it is important to not carry such a huge debt. Then, during times of crisis, the government can borrow and spend the money as needed. And when the crisis is over, the debt should be paid back.
Now, every time there is a crisis (which now constitutes the S&P 500 dropping a few percent) the Fed comes running with the monetary firehose (or jawboning) which has caused many of the economic problems we are dealing with today.
THAT IS THE ONLY MANDATE OF THE FED. to keep her owners solvent with as much free currency paid for by the 99.99% of the people of this great empire we call idiocracy.
As Dr. Ravi Batra said in his book Greenspan’s Fraud, pg. 142:
“In Twentieth Century America, output grew strongly in 1900s, 1940s, 1950s, 1960s, and then in the second half of the 1990s, with annual GDP growth exceeding 4 percent-but market bubbles only arose in the 1920s, and from 1982 to early 2000, when growth was mediocre, even below average.”
“The behavior of wages and debt answers this puzzle. When wages grew smartly with productivity, output grew sharply without much rise in debt. Thus, high wage growth alone produced high output growth, but no bubbles, because rising worker salaries precluded the sharp rise in profits.”
Quite simple. It’s not a matter of “should”, the FED is going to cut rates. The FED is going to cut rates by 0.50%. Mr. market tells me so.
With both Parties taking no interest in reducing spending or reducing the existing Trillions in Debt it seems to guarantee that every dollar you hold today will keep declining in purchasing power for decades to come. Is America following the economic history of Argentina ?
I wish the Fed could arm-twist Congress (and the president) to radically cut spending: Balance the budget and we’ll cut rates by 2%. Leave spending unchanged and we’ll raise 1%. It’s not proper functioning of the republic, I know. The entire medical-insurance needs to be gutted, ending fake bills and unnecessary meds and procedures. The military industrial complex also needs to be cut by at least half.
The Fed enabled the spending with bond purchases, financial repression and the Fed put. Take all that away and interest rates would rise and force a more disciplined approach to the runaway deficits.
The self-restraint of politicians and the Fed’s willingness to act on a flawed inflation statistic isn’t going to get the job done.
Well stated! I agree 100%.The Fed’s job should be to maintain price stability, which means 0% inflation. It cannot control the employment rate and shouldn’t try.
You contradict yourself.
You cannot have 0% inflation and price stability. Free market forces are deflationary over time as the free market finds ways to deliver goods and services at lower prices and/or increased quality. Thus over time with 0% inflation *of the money supply* prices would generally fall across the board until reaching some equilibrium point.
The Fed exists to facilitate the government’s parasitical stealing of what the free market would naturally deliver to the people in terms of increased standards of living.
Free market forces are not deflationary over time.
They *might* be in some areas (electronics for example) but they definitely won’t be in other areas (finite or nearly finite resources like land, lumber, water, oil etc) where eventually demand due to rising population outstrips the ability for supply to keep up.
bingo.
Since 2008 and perhaps before, the Fed put entered the scene as an unstated mandate. It used to be that the Fed wouldn’t wield such a heavy hand to intentionally manipulate asset prices.
But now it is preemptively inflating markets as part of a wealth
transfereffects doctrine. The problem is that this inflationary process creates an extreme divergence where most of the financial gains flow to the top.This will continue as long as it isn’t called out by political leaders or the corporate media.
“The problem is that this inflationary process creates an extreme divergence where most of the financial gains flow to the top.”
And, even worse: Once this has gone on for any amount of time: Those “at the top” are “at the top” solely and only due to exactly this inflationary process. And nothing else. Not due to ANY merit aside from just being Fed favored.
With the inevitable result that ALL scarce, potentially productive resources, are now in the hands of a small clique who has NO clue about anything at all, other than being fed debasement driven “gains” that The Fed has stolen from potentially less clueless others.
And the wealth concentration from “debasement” leads to extreme political concentration where the big money influences all the important legislation including foreign and domestic policies.
since beginning of clipping coins and printing currency and now mouse click currency, the men that control the printing presses and have first access to the currency win the board game of “monopoly”. the rest of the mandates are pure rubbish for the rubes and middlebrows. hat tip hl mencken.
Triple Mandate since 1977. Why the disconnect? I’ll defined?
We should be posting the full legal mandate, to dislodge the Big Lie of the “dual mandate”. The Fed has bent the letters of the law beyond the point where even Captcha would recognize them.
Manage growth of money & credit, commensurate with economic growth, so as to ensure:
Stable Prices … not 2% inflation.
Maximum Employment … not mumble mumble unemployment
Moderate Long Term Interest Rate … not ZIRP/NIRP
If the fed cuts 0.50%, they are clearly signaling they are more focused on wall street than main street.
I almost think the opposite. If unemployment (especially full time unemployment) kicks up … that impacts main street in a big way. I wish someone had the idea that getting the he– out of the way, indexing cap gains for inflation, and a few other moves to reduce regulations … might improve employment without bringing on inflation. But main street is about jobs (not the perceived jobs the WH keeps talking about).
Lowering the Fed’s short term rate will not have any near term (1-6 months) favorable effects on unemployment.
Prove me wrong.
A workable Fed or Congress is required, but both seem unattainable. Unbridled spending beyond our means must be throttled. Only a severe recession can fix otherwise.
I truly believe that, unless we cut spending, all of this is performance theatre.