"EVERYONE clamoring for rate cuts at this time... BAD IDEA!
- Thread starter Scataphagos
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I hear you but even in this down turn markets can skyrocket out of no where.....
One of the most crucial thing with monetary policy is not about quantity; it's timing. One rate cut this year is fine but the Fed needs to do it soon not wait until the end of the year when the economy is really in the shit. CPI numbers are down, job market is getting weaker, GDP is going down...I dunno what the Fed is still waiting for. If you want to really avoid a recession, it's to cut the rate now to give the economy a bit of boost when it's starting to show weakness. One rate cut now is better than three rate cuts later because it takes time for monetary policies to take effect and finally impacting all sectors of the economy so if you do a rate cut now, it would have time to take its effect vs when you do three rate cuts later leaving it no time to do anything this year unless the Feds really doesn't give a shit about the economy going to the dogs this year.
And then there is the whole shit with the Fed claiming they don't want these potential cuts to become a political statement, as the election is so near. Umm....Too late!
It's like, WTF!
Mortgage rates need to come down so people (especially first-time home buyers) can afford to buy a home. That would be a great boost to the economy. The Fed really should do a 50 beeps cut in September.
Oh God!! Political statement??!!! The Feds is supposed to be independent forcrissake! They are making policies about how to manage money!! Money doesn't really know or care who goes into the Oval Office. Money is money!! If they are not making political statements, nobody will be accusing them of making one. LOL So were they making political statements all those times?? If not, then why the "concern" now? LOL
The money supply really leveled off (and even dipped for a bit) after Covid. The money supply increase from Covid has mostly worked through the system and I wouldn't expect any significant upticks in inflation from here. The higher increases in interest rates have created a couple of problems:
1. A lot of spending is going towards paying interest on the debt (over double from pre-Covid).
2. The real estate market has gone stagnant with supply at lows and particularly pricing out younger generations (people will not trade a 3% mortgage for a 7% mortgage).
1. A lot of spending is going towards paying interest on the debt (over double from pre-Covid).
2. The real estate market has gone stagnant with supply at lows and particularly pricing out younger generations (people will not trade a 3% mortgage for a 7% mortgage).
A small amount of annual inflation keeps people investing and from simply sitting on their cash with complacency.Years ago, recessions were merely "part of the economy" (a good part, IMV). But then one day, the Fed claimed, "we can manipulate interest rates/money and avoid recessions in the future". Isn't that good? Well, no... natural economic cycles were supplanted with perpetual inflation.. and that is NOT good!
Firs it was the liquidity hose to put out the LTCM fire, then it was TARP and endless bailouts for corrupt TBTF banks via government hedge funds aka Maiden Lane I & II. Then in 2020 we had the fabled "helicopter Ben" strategy pulled off by Trump, Congress & the delusional Fed. It just gets worse & worse by the day.
I forgot about the liquidity hose to quell the SVB & FRC contagion. Amazing how the FDIC covered the VC idiots at SVB who thought FDIC covered infinite deposits and not the $250K that they were chartered for.
I forgot about the liquidity hose to quell the SVB & FRC contagion. Amazing how the FDIC covered the VC idiots at SVB who thought FDIC covered infinite deposits and not the $250K that they were chartered for.
See if the free markets were involved in these type of situations we would actually see a real economy but with intervention and trillions spent on bailing out each of these problems you get nothing but a make pretend economic system where everything is smoke and mirrors.....just let the economy cycle through the downturns and let it be, they get involved with way too much intervention and that causes even more disruption when things start to really unwind.