The Fed Is Finally Seeing The Magnitude Of The Mess It Created.

[M.W.]

Who says it would be easy? But it would have been the prudent thing to do. What do you think this has done to the system?

A) complete loss of trust and faith in the system because fed apparently only rescued those it had cosy relationships with. The banks that did not rub elbows with Fed were let go bankrupt. Keyword: revolving door and corruption at the highest levels

B) an inefficient, polluted, and overweight collection of corporations who can take extraordinary risk because they can rely on the Fed backstop in case of crisis. The stress tests of the fed are an utter joke in case you have ever bothered to study the details. Instead of cleansing the system we are now saddled with a bunch of highly inefficient behemoths who can't innovate and adapt.

Who cares whether Citi exists today. And another 5000 corporations or so who engaged with Citi in irresponsible lending, financing, or loan practices. Instead we would now have a market that is streamlined, where risk is taken proportionately to the ability to manage such risk, and where management is actually held responsible.

The current system has caused even intelligent and educated people to completely lose trust and faith. For the first time in my life I sympathize with preppers and those who wish the masses will rise up and squash our nepotistic leadership and elites who harm the middle class.

Stop printing? It may collapse much earlier e.g. if Hank Paulson didn't hand out money, Citi may not exist today. It was easy for Jim Rogers to say, "Let them go bankrupt."

 

[Scataphagos]

Thanks to Powell and Yellen and Bernanke and Greenspan, we’re living with the consequences of the Greenspan Put, followed by a decade of QE, followed by the “panic and print money” mania of the past two years.

100% agree. Regardless of how beneficial some may see actions of the Fed, the fact remains that the $USD has lost between 95-99% of its buying power under its guidance. That's just pure evil!

Currency debasement has brought down many a country, regime, empire. Should have not happened in America. And now we have HELL to pay, one way or another... just as all the smart guys have been saying all along.

 

[Sprout]

Meanwhile...quietly...the gov't continues to hand out an extra $16B per month in "emergency Covid relief" funds via Medicare subsidies and a host of other cash freebies. Everything the Fed does is lagging. Fiscal policy is throwing gas on the fire and low information voters continue to believe that "an inch" is really nothing at all and things are just fine.

What exactly is the Fed supposed to do here?

https://twitter.com/x/status/1573278452781879296

 

[piezoe]

There's only high inflation because of money printing and dropping interest rates ridiculously low in the first place.

Wait a minute! This is decidedly untrue. You been living under a rock? No one disputes that the Fed contributed by continuing QE too vigorously after the Congress stepped in with focused fiscal measures to alleviate pain from Covid layoffs and shut-downs. The fed action on top gave us a double whammy we did not need. But to say the current inflation is "ONLY" because of Fed action is nonsense.

Current inflation is as much, or more, caused by external than internal factors, and it is showing signs of remission. As with our prior experience with externally caused inflation, fed action will be relatively ineffective until we reach draconian rates. We will have a Larry Summers style recession, which signals a dire lack of imagination on Summers part. But it didn't have to be quite so bad had the Congress and Administration taken all the measures available to them early on. The fed is powerful; not "all powerful". Let's stop attributing powers to the fed it does not have. True, the fed contributed to the current inflation. The main cause, however, can be found in external factors difficult to deal with.

N.B. --- technical point: fed rate lowering via QE does indirectly increase the money supply, but not by "printing". QE converts private sector money in the form of Treasury securities into private sector money in the form of bank reserves. Or, in other words, QE does not cause an increase in the money by "printing" unless you insist on calling bank lending "printing". If so, to be consistent , you should call paying off a loan "shredding".

 

[Concinnity]

I don't understand why people act like there's always a correct or even good path to take. You do realize no economical system is or will ever be perfect and that they follow the cycle of life just like everything else, it's born or created and it will eventually die or at least have a reset. Even if we had a perfect system, humans aren't perfect so there goes that.

Objectively US has remained at or near the top for a very long time, with unprecedented wealth and opportunity, some of you sit here and criticize in hindsight decisions made as if there's some all righteous path to go down, where the system survives forever. It's unrealistic.

Of course I am not saying go to other extreme and don't try to make the best decisions or that any decision made is above reproach. But the way people approach this as if they are all knowing that the decision tree they wanted to go down would of magically made everything ok, it's not really realistic.

 

[M.W.]

Either criminally negligent or unrealistically truthful and ethical? Why not realistically ethical and truthful. It does work and exist, I and a bunch others lived their entire lives like this. An incredibly rewarding choice of life.

I don't understand why people act like there's always a correct or even good path to take. You do realize no economical system is or will ever be perfect and that they follow the cycle of life just like everything else, it's born or created and it will eventually die or at least have a reset. Even if we had a perfect system, humans aren't perfect so there goes that.

Objectively US has remained at or near the top for a very long time, with unprecedented wealth and opportunity, some of you sit here and criticize in hindsight decisions made as if there's some all righteous path to go down, where the system survives forever. It's unrealistic.

Of course I am not saying go to other extreme and don't try to make the best decisions or that any decision made is above reproach. But the way people approach this as if they are all knowing that the decision tree they wanted to go down would of magically made everything ok, it's not really realistic.

 

[Clubber Lang]

He did raise rates until agent Orange had a meltdown and pressured him into lowering them.

View attachment 295906

The Federal Reserve is independent dummy.
They answer to no one.

Seek help for Trump Derangement Syndrome. It is real

 

[SunTrader]

Fitting that dummy and tRump are mentioned in the same post.

After he "aced" his mental competency test, made it seem like he would then be admitted to Mensa.

 

[themickey]

The fed action on top gave us a double whammy we did not need. But to say the current inflation is "ONLY" because of Fed action is nonsense.

I never dreamed that one day I would call you out and tell you, "you are talking pure bullshit!".
I'm more and more getting the impression you work for and are a Fed stooge mouthpiece.

Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program
Published Sun, Mar 15 2020
https://www.cnbc.com/2020/03/15/fed...-700-billion-quantitative-easing-program.html
Key Points

• 
  
  
  • In an emergency move Sunday, the Federal Reserve announced it is dropping its benchmark interest rate to zero and launching a new round of quantitative easing.
  • The QE program will entail $700 billion worth of asset purchases entailing Treasurys and mortgage-backed securities.
  • Markets responded negatively, with Dow futures pointing to a drop of 900 points when the market opens Monday morning.

Chairman Jay Powell on massive actions taken by the Fed to aid economy

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.

The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0% to 0.25% down from a previous target range of 1% to 1.25%.

As mentioned, the Fed jerk interest rates up and down, creating volatility in the markets and economy.
They should leave interest rates @ ~ 2.5% and be done with.

Bottom line, Powell and his cronies are fucking idiots and should be sacked!!!

 

[piezoe]

I never dreamed that one day I would call you out and tell you, "you are talking pure bullshit!".
I'm more and more getting the impression you work for and are a Fed stooge mouthpiece.

Federal Reserve cuts rates to zero and launches massive $700 billion quantitative easing program
Published Sun, Mar 15 2020
https://www.cnbc.com/2020/03/15/fed...-700-billion-quantitative-easing-program.html
Key Points

• 
  
  
  • In an emergency move Sunday, the Federal Reserve announced it is dropping its benchmark interest rate to zero and launching a new round of quantitative easing.
  • The QE program will entail $700 billion worth of asset purchases entailing Treasurys and mortgage-backed securities.
  • Markets responded negatively, with Dow futures pointing to a drop of 900 points when the market opens Monday morning.

Chairman Jay Powell on massive actions taken by the Fed to aid economy

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.

The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0% to 0.25% down from a previous target range of 1% to 1.25%.

As mentioned, the Fed jerk interest rates up and down, creating volatility in the markets and economy.
They should leave interest rates @ ~ 2.5% and be done with.

Bottom line, Powell and his cronies are fucking idiots and should be sacked!!!

I have not been enthusiastic about Powell's leadership. Although he is only one voice among the Governors and crucial FOMC, he is the Chair. But you are here referring to precisely what I was referring to when I called a full fledged fed response to Covid in March 2020 an un-needed double whammy. Virtually simultanoeusly with the fed action in March 2020 the Congress passed the first major Covid relief bill, H.R. 6201. The fed should have moderated their response, as the fiscal response is more effective. Nevertheless, we did not experience wide-spread inflation in early 2020. The real genesis of the present inflation was the pandemic with its attendant supply chain interruptions, major rise in shipping costs, and then a war in Ukraine!

See my opening #1 and subsequent posts #3,8,16,21,37!,42!,48 in the Economics Forum in the Thread entitled "Genesis of Today's Inflation" if you have any interest in what would be my full response. Also in that same thread, post #12 is important. I am not alone in my view that the major contributor was not fed action per se but fed action on top of a combination of U.S. fiscal action and other consequences of a worldwide pandemic and is being fueled further by a war in a country that is both a major source of commodities and energy, and by profiteering of
course...

It is simply a myth that QE will necessarily cause inflation. QE is not "printing". It's intention is to fuel credit with swollen reserves and low interest. New credit increases the money supply. Normally, once credit picks up QE would be withdrawn. I believe Powell et al. misread the economy, but i certainly do not believe fed actions were the main drivers behind our present inflation.

On the other hand, extreme fed tightening will get even the current inflation down. Then we will have a net reduction in money supply as creditors pay down high interest loans and stop taking out new loans. It will be a windfall for the few whose income keeps pace with inflation and have fixed, low interest loans whose real rates will go negative. Little comfort to those losing jobs.