Fed must bisect to regain credibility...

[spy]

instead they're so scared of causing any measurable harm to the economy that they'll be tippy-toeing rates forever. This is why the market sees them as "chicken hawks".

Ironically, causing harm to the economy is exactly what needs to be done for inflation to be brought back in line.

Could this be the end of fiat currency? Not likely. But, at the end of the day, it will actually cause more harm than if they went full Paul Volcker.

 

[schizo]

Inflation or not, people still shopped like crazy over the Black-something day like there was no tomorrow. I guess Powell realized that there was no point of reigning in inflation when you have these idiot consumers acting irresponsibly.

BTW Fed is and has been under the sway of Wall Street. If the fat cats on Wall Streets show their disapproval, as they've done recently with the threat of recession, Powell will cave in.

 

[SoyUnGanador]

I must be missing something, hasn't the Fed had an unprecedented rate of rate hikes recently, and didn't an inflation read just come back significantly cooler than expected?

 

[spy]

I must be missing something, hasn't the Fed had an unprecedented rate of rate hikes recently, and didn't an inflation read just come back significantly cooler than expected?

Volcker raised to 20% and unemployment went over 10%. Right now we're starting to see small improvements, sure; mostly just in housing. The labor market is still very strong and so a wage-price spiral is very possible.

It's the difference between "beating around the bush" and "taking the bull by the horns". In the former we could go into stagflation for a long time, in the later the waste gets flushed out almost immediately.

What I'm suggesting is... it's probably better to swallow the medicine all at once so that the market can give clear feedback of exactly where restrictive is, then they can modulate rates up/down so that the damage can be minimized (i.e. bisect).

Instead Powell's taking baby steps up... could take forever to find restrictive, and there's a greater risk of pivoting too soon. They're using hawkish rhetoric but failing to back that up with action. And, many market participants don't seem to believe the rhetoric.

 

[KCalhoun]

politicians and federal government employees are IDIOTS

 

[spy]

politicians and federal government employees are IDIOTS

That's the easy explanation. But, if it were true, we'd see much more turnover in those positions.

I find it far more likely that they're extremely smart. And, they're using that smarts to disguise their collusion from the ordinary citizen. The goal being to pay for fiscal recklessness via financial repression.

Being honest and increasing revenues by taxation wouldn't be as effective and would have adverse consequences [for those in power]. For better or worse, staying in power is the name of the game.

 

[SunTrader]

Bisect?

 

[spy]

Bisect?

Yes, as in overcompensate in one direction and then back in the other by less, and then back in the other by even less... repeating until you find the "sweet spot". As opposed to moving towards the "sweet spot" a little, then a little more, then a little more.

Point 'C' would be the sweet spot in the following image:

 

[Overnight]

Yes, as in overcompensate in one direction and then back in the other by less, and then back in the other by even less... repeating until you find the "sweet spot". As opposed to moving towards the "sweet spot" a little, then a little more, then a little more.

Point 'C' would be the sweet spot in the following image:

That is pretty much what they did in mid-2018 to early 2019. I don't think they will find that sweet-spot again so quickly. Very late 2023-early 2024 is when they will find it again, IMHO.

 

[maxinger]