As expected, mixed signals in today's announcement re interest rates and the economy.
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J. Powell and the Fed.
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Last: 2 yr ago by YouBet
I DISAGREE
with what..?
EXACTLY
Lot of sabre rattling today.
Powell and the majority of the Fed members are clueless. They are wrong a majority of the time. The models they use are antiquated. Just go back and look at the Fed history from the beginning.
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ac04 said:
unelected and unaccountable clowns. they think they are scholars adjusting the economy like the temperature on a thermostat and in reality they are homer simpson fiddling with a nuclear reactor. completely insane that people just accept this as normal.
Beautiful post
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
Read The Creature from Jekyll Island, where you can learn about the history of the Fed, and why it does what it does. This is all by design.strbrst777 said:
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
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Conor Boyack writes good books.
You're not wrong in the causal factors world...but I would say expanded M2 money supply by 50% in the course of 2 years had something to do with it as well.strbrst777 said:
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
ETA: The common refrain is that the Fed can't control supply side inflation and only demand side inflation and for the most part, I agree. The nuance though, to your point, is that the Fed can make debt so cheap and easy to acquire that you lose sight of what creates value and what doesn't. To the extent that higher rates restricts the ability of companies like Lyft, Carvana, Trivago, Virgin Galactic to "produce" products that don't have a material benefit to the economy, I think higher rates might actually be a net benefit to supply side inflation. It makes investment focus on value add products and services rather than junk. It's a long winded thought more than anything, I still agree with you.
WSJ reported that Powell is likely to raise rates in July at next meeting. ESB raised a quarter point today.
Sims said:You're not wrong in the causal factors world...but I would say expanded M2 money supply by 50% in the course of 2 years had something to do with it as well.strbrst777 said:
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
ETA: The common refrain is that the Fed can't control supply side inflation and only demand side inflation and for the most part, I agree. The nuance though, to your point, is that the Fed can make debt so cheap and easy to acquire that you lose sight of what creates value and what doesn't. To the extent that higher rates restricts the ability of companies like Lyft, Carvana, Trivago, Virgin Galactic to "produce" products that don't have a material benefit to the economy, I think higher rates might actually be a net benefit to supply side inflation. It makes investment focus on value add products and services rather than junk. It's a long winded thought more than anything, I still agree with you.
High time preference (material-less products) versus low time preference
Well said! Bad incentives create bad products and economies based on junk.
strbrst777 said:
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
1) It's not a one man show. They have over 200 PhD economists on staff
2) Back when raising rates should have been done (late '21) inflation really was just a handful of industries. It was not widespread until April '22.
.aggiebrad94 said:strbrst777 said:
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
1) It's not a one man show. They have over 200 PhD economists on staff
2) Back when raising rates should have been done (late '21) inflation really was just a handful of industries. It was not widespread until April '22.
It is not a one man show but the chairman is more than a spokesman. "Over 200 PhD economists on staff" is a recipe for confusion. Powell said that inflation is higher than expected. What did he expect? Inflation in my view has been and is higher than Powell is willing to admit. Broad-brush national measures are one thing... reality is another. Reality can be quite different taking into account demographic and geographic realities. I am not a Powell fan and will let it go at that.
You don't have to be a Powell fan but he is no Bernanke. He came into the Fed having already had a pretty fantastic career with Carlyle - he's not looking to enrich himself in my opinion. He was spoken of very highly early on in his tenure by Richard Fisher as a thorn in Bill Dudley's side. I think one thing that Powell has going for him is his patience...he's trying to break the trend of the Fed abdicating their monetary policy to private equity. He's been on the shrink the balance sheet train since 2012. He's been a vocal opponent of too big to fail, Fannie, Freddie. In his first year as Chair, the fed hiked rates 4 times. One thing that people forget is that we were likely heading into recession...or at least trending that direction...before Covid was even a thought. Covid was a gift to the doves in terms of monetary and fiscal policy.strbrst777 said:.aggiebrad94 said:strbrst777 said:
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
1) It's not a one man show. They have over 200 PhD economists on staff
2) Back when raising rates should have been done (late '21) inflation really was just a handful of industries. It was not widespread until April '22.
It is not a one man show but the chairman is more than a spokesman. "Over 200 PhD economists on staff" is a recipe for confusion. Powell said that inflation is higher than expected. What did he expect? Inflation in my view has been and is higher than Powell is willing to admit. Broad-brush national measures are one thing... reality is another. Reality can be quite different taking into account demographic and geographic realities. I am not a Powell fan and will let it go at that.
Adverse Event said:Sims said:You're not wrong in the causal factors world...but I would say expanded M2 money supply by 50% in the course of 2 years had something to do with it as well.strbrst777 said:
If Powell is so smart, why did he play such a big roll in getting us into this inflationary mess? I refer to dropping interest rates to historically next-to-nothing lows? Can't wait for Janet Yellen to chime in with her two cents worth.
ETA: The common refrain is that the Fed can't control supply side inflation and only demand side inflation and for the most part, I agree. The nuance though, to your point, is that the Fed can make debt so cheap and easy to acquire that you lose sight of what creates value and what doesn't. To the extent that higher rates restricts the ability of companies like Lyft, Carvana, Trivago, Virgin Galactic to "produce" products that don't have a material benefit to the economy, I think higher rates might actually be a net benefit to supply side inflation. It makes investment focus on value add products and services rather than junk. It's a long winded thought more than anything, I still agree with you.
High time preference (material-less products) versus low time preference
Well said! Bad incentives create bad products and economies based on junk.
The rediscovery of profitability by most firms lends to this as well.
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