The Spin Meister
Active member
Kevin Warsh, rumored to be next Fed Head, takes Andrew Sorkin to school…,
Great CNBC interview about the Fed
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The Spin Meister
Active member
Yes. He said ‘regime change’ and ‘Powell and his boys’ several times
I think the Fed likes to keep interest rates high as long as the economy is doing well. That way they have more room to cut rates at a later date if the economy turns south. My problem is that high interest rates don't just hurt the private sector. They cause interest expense on the federal debt to be higher than necessary.
This piece is both history and opinion. Most Jekyll Island 1913 articles are similar. Some pro, some con. FWIW.
LudicrousSpeedGO!
Active member
Except when a Democrat is in office.
I mean your thought makes sense when a R is in office. But look at what the fed has done recently.
1) Jumbo cut a few months prior to the last election while inflation was where it is today. Extremely dovish but now inexplicably switched to hawkish.
2) Refused to raise rates for a year and a half of runaway inflation under Biden until after we hit a 40-year high inflation over 8% and inflation continued until over 9%. On top of this, they toted the Biden admin "transitory" lie the entire time. Massively dovish, like against all economic theory.
3) Raised rates 7 times when Trump took office including twice when inflation was below their 2% target and leading into mid-term elections. Inexplicably hawkish from the same group that was extremely dovish under Ds.
4) Kept rates near zero for the entire Obama admin except the very end and after Trump was already elected. This was the longest period of sugar high in our nation's history.
The entire argument of the FED not cutting now is completely devoid of any recent historical context. It's like they think that we have no knowledge of the decisions that they've made over the last couple of decades. Meanwhile, the housing market is headed towards a cliff with gridlock due to high rates (as if we've forgotten what happened just 16 years ago).
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The Spin Meister
Active member
And that rate manipulation was amplified by gaming the money supply by either quantitative easing or tightening.
Powell has been terrible and Yellon made it worse. Some difficult days ahead.
Yellen financed the ever increasing debt with short term notes in order to minimize interest expense. Now those notes are maturing and Bessent will have to borrow more at higher rates. The media will blame Trump.
1) I agree that the Fed lowered rates when inflation was higher. I guess their justification was that inflation was coming down. It doesn't seem to be coming down anymore but it's also not going up.
2) The fed argued that inflation under Biden was transitory and that's why they didn't raise rates for quite a while. Of course and tariff related inflation would also be transitory.
3) I think they raised rates 7 times under Trump because they wanted to be able to cut rates if/when things softened. The Fed has always acted like that.
4) Yes but Trump enjoyed extremely low rates for a while too.
Remember 2 things. One is that Trump appointed Powell. The other is that 8 people vote on rates. Replacing Powell might not change their consensus opinion.
The Fed has important functions like regulating banks but the amount of time and media hoopla given each month to a group of people deciding on whether the Fed rate should be 4.3% or 4.1% is ridiculous. That meeting should take about 5 minutes but instead it's turned into a very expensive soiree where elites gather to flaunt their importance. JMO.
LudicrousSpeedGO!
Active member
1) That justification would be applicable now as well. Inflation is down 10% since Trump took office from 3.0% to 2.7%.
2) Agreed on the tariff related inflation which simply hasn't shown up. Even if the Fed argues that tariffs caused a minor increase in inflation this past reading, they would be wrong. The tariff-sensitive parts of CPI were flat to some even down. Energy was up 0.9% month over month due to the brief Iranian conflict. That was the main culprit. Also rent equivalents. And PPI decreased to 2.3% (2.5% expected and 2.6% the month prior). So if tariffs were causing inflation, producers would be showing inflation.
3) Why did they wait until Trump was elected to raise rates (including twice under Trump when inflation was BELOW their target rate)? Obama got 8 years of sugar high but the moment Trump is elected it ends? That make zero sense, unless it is only political.
4) Trump had near zero rates for less than a year (about half as long as Biden had while Biden was running inflation up to 40-year highs) and only after Democrat governors kept their state economies shut down for months longer than Republicans did threatening to collapse our entire economic system. The worst offenders were NY, NJ, CA, and VA Democrat governors who not only remained shut down for the longest times but also had the largest port and shipping operations by gross tonnage. They single-handedly created and exacerbated supply chain issues that contributed greatly to future inflation.
https://www.nbcnews.com/news/us-new...-what-states-across-u-s-are-starting-n1195676
I don't know any economist who didn't think that they had to cut rates to near zero with extended shutdowns of state economies. But the real economic policy insanity was keeping them at zero for a year and half of rapidly rising inflation to 40-year highs under Biden while Democrats passed trillions of additional stimulus packages well after the states had re-opened and after inflation was multiples of the FED target. This was pure economic insanity and akin to pouring gasoline on the inflation fires. The result was sticky (not transitory) inflation that cumulatively amounted to a 21% tax that you, your kids, their kids, and every generation that follows will have to pay on every that they EVER buy FOR LIFE. That's how inflation works. You cannot undo it. The Biden inflation will cost you 21% in every purchase you ever make. The FED unbelievably sat on their hands and let it happen. There was no basis in economic theory to do so. It was against everything any economics or finance text would ever suggest in that environment.
marylovesthelions
Member
This is a MUST WATCH. This guy is a genius plus a great communicator.
marylovesthelions
Member
Why? TDS plays a bigger roll than economic theory at the fed now.
The Spin Meister
Active member
Watch the next segment. Best part was when he finished everyone just sat there in stunned silence. Until Joe spoke up and said something like ‘Best way to learn something is to keep your mouth shut’
He would be a great Fed Head. And hoping a few more like him get appointed to the Board of Governors.
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AnyNameYouWish
Active member
I barely skim your nonsense, because it's full of lies and misrepresentations, and it's not worthwhile to read it in-depth, any longer. But ran across this gem ... they started raising rates in Dec 2015 when economic indicators deemed it warranted, and they planned to keep doing so, but China crapped the bed in early 2016 and spooked everyone, putting the plan on hold. This, obviously had nothing to do with Trump. And raising rates from near to zero, to less near zero, is a GOOD thing.
You obviously have no idea what you're talking about, and you're trying to retrofit an analysis to fit your preconceived destination. Once things settled down from the China uncertainty, they went back to their plan. Again, this was a GOOD thing. Unfortunately, Trump couldn't see the good thing, and wanted to enrich himself and make himself look better, so he tried to goose things ... which would necessarily eventually lead to inflation (which ... imagine that ... happened), and then we faced the covid debacle where temporary solutions exacerbated the inflationary pressure, which eventually exploded for a short period of time, and which the Biden administration and the Fed did a good, but not great, job of addressing.
Unfortunately, for them, and us, as Americans, the baton was passed back to Dictator Dipshit, whose insanity has paralyzed rational decision makers who know better than to cave into the idiocy Trump promulgates.
