Fed's Kohn on Crack. See's Inflation Moderating

[Landis82]

Quote from Ivanovich:

Ah, so sarcasm creeps in when you have no other explanation. And here I was thinking we could debate this intelligently without the need for being pricks. At least I was only wrong about that belief.

"China" is not the reason oil took off at the exact moment the Fed suprised the market with a 50bps cut. It definitely is part of the reason oil has stayed so high for so long, but a weak dollar began this last leg up - and THAT is the work of the Fed cutting rates.

Even if what you say about the 50 basis point rate cut ( and the weaker dollar ) as it relates to CRUDE OIL is correct, why in Earth would you sacrifice the banking system in order to bring down commodity inflation, much of which is the result of Global forces and not domestic ones?

You and the others that carry this "We Need To Create A Recession In Order To Bring About A Correction in Commodity Inflation" torch conveniently avoid[/i] how raising rates would "cripple" the banking system.

So how do you cut off your nose despite your face in this regard?

Please address what happens to the banking system if rates are raised for the sake of bringing about a correction in inflation. As it is, please be mindful that the current U.S. banking system is literally "frozen".

Thank You.

 

[detective]

Quote from makloda:

What's the alternative though? Should the Fed run its policy according to how volatile energy and grain commodities trade? Hike 50 bps when oil is up $15 and cut 50 bps when oil is down $20?

Doesn't make much sense to me.

Cutting 225 bps while oil has gone up $30 is insanity, and that will soon be 275 bps in a month. And the 30 year mortgage rates are going up, not down. This is not what the Fed wanted.

It just makes me more bullish on commodities the more these idiots ignore inflation.

 

[Aaron Copland]

Quote from Landis82:

That's right.

Put the entire banking system into a "depression" just to force a correction in commodities.
That makes a TON of sense.

As it is, a couple of weeks ago the Port Authority of NY had to pay 20% in order to finance $100 million of short-term debt to the next auction because banks like Goldman and Citi chose to "back-away" . . .

And you want the FED to raise rates?
You clearly have no idea what you are talking about.

If you can show me were I said anything about raising rates, I will stand corrected.

The fed should have let the free market sort this out. They should stand aside and quit micro mannanging.

 

[canuckrookie]

Quote from detective:

Cutting 225 bps while oil has gone up $30 is insanity, and that will soon be 275 bps in a month. And the 30 year mortgage rates are going up, not down. This is not what the Fed wanted.

It just makes me more bullish on commodities the more these idiots ignore inflation.

Yes it does! Every time they talk about tame inflation the commodity markets give a big FU back. Talk is cheap it's all in the charts.

 

[canuckrookie]

Quote from Aaron Copland:

If you can show me were I said anything about raising rates, I will stand corrected.

The fed should have let the free market sort this out. They should stand aside and quit micro mannanging.

I am not sure what aspect you are talking about in the "free market" because it's the free market that partly caused this nightmare to start with. Trillions of dollars in derivatives and level 3 garbage were conjured up by the "free market" and not because of sound government policy and watch dogs.

 

[JamesVU2000]

exactly. This invisible hand is the biggest load of bs ever

 

[canuckrookie]

Quote from canuckrookie:

I am not sure what aspect you are talking about in the "free market" because it's the free market that partly caused this nightmare to start with. Trillions of dollars in derivatives and level 3 garbage were conjured up by the "free market" and not because of sound government policy and watch dogs.

EDIT: VISA sure picked a good time to "unlock it's true value in the marketplace". What will happen when the credit card defaults start to sky rocket? Meanwhile MBIA and friends are conducting business as usual and people wonder why things are so f#&ed up.

 

[Ivanovich]

Quote from Landis82:

Even if what you say about the 50 basis point rate cut ( and the weaker dollar ) as it relates to CRUDE OIL is correct, why in Earth would you sacrifice the banking system in order to bring down commodity inflation, much of which is the result of Global forces and not domestic ones?

You and the others that carry this "We Need To Create A Recession In Order To Bring About A Correction in Commodity Inflation" torch conveniently avoid[/i] how raising rates would "cripple" the banking system.

So how do you cut off your nose despite your face in this regard?

Please address what happens to the banking system if rates are raised for the sake of bringing about a correction in inflation. As it is, please be mindful that the current U.S. banking system is literally "frozen".

Thank You.

Eventually the piper has to be paid. Perhaps the discount could be lowered, or the Fed could spam dollars in auctions like the ECB is doing. They didn't cut rates, but they sure as hell threw a lot of Euros at the banking system. The Fed has other tools at it's disposal, and while I'm not saying it should have not cut rates, I am saying it should have not cut rates so deep, so fast, with no concern about anything else.

There will be a price to pay for this action, and it will be John Q. Public who pays it once again. With no savings, no purchasing power, and no discretionary income, the consumer will be dragged out the back door and beaten, left to bleed to death in the alley way.

But all the banks will be just fine!

Perhaps some banks have to fail when they make poor decisions? Maybe we need less of them. I don't know the answer, but the answer is certainly NOT stagflation!

The market has mechanisms for getting itself out of recession. But every time the Fed steps in to micro manage it, history shows them mucking it up!

 

[Ivanovich]

At least Fisher gets it. Or is beginning to get it. Take your pick.

US FED: Fisher - Weak Growth for Some Time, Inflation Higher
Tuesday, February 26, 2008 3:03:00 PM

Boston,

February 26. FRB Dallas president and dissenting FOMC voter Richard Fisher told

NPR he's more concerned about inflation than he has been in a long time. He

says the economy is no doubt in a funk and that the malaise could last for some

time. Likewise, he says the Fed will not likely reverse course (i.e., start

hiking rates) quickly.

 

[promagma]

Quote from Aaron Copland:

You can't have it both ways. The fed is out of control, they only care about wallstreet and the money center banks.

Yeah, the fed has friends on wall street, but they really exist to serve the government. The U.S. government is the worst offender by spending however much money they want. I vote for the tightwad every time (not sure who that is, if Ron Paul is not a choice).