Rates are low. If you're old enough to remember 17-18% for a home loan you have some context. The only Santa Ana winds blowing is the nonsense coming out of Trumps mouth. Get off twitter Mr. President. Fuck that hot wife of yours and chill for awhile.
Will the FED be taking down Trump or was this rate hike appropriate?
- Thread starter TJustice
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If you know there is going to be a recession... why would you be in favor of tightening?
I need to you to think about that? The idea the FED can lower rates in the future by raising them now might make sense during a strong expansion. But it makes little sense after the long weak expansion we just had... when you see a recession in the near future.
The FED screwed up this economy... we don't need them falling back on their old tricks.
We need better thinking.
I agree rates are historically low.
The FED allowed the banks to screw this economy into the ground with mal investment due to cheap money.
We have had to keep rates low because we have had a fake economy propped up by stock prices and low rates. The base of the economy needs to rebuild. Let increasing wages and oil prices be the natural brakes. Let the bond market be the break as it has to eat up the govt debt.
Now that is my opinion and it has nothing to do with Trump.
As far as my money / business... I made a boat load (for me) after losing a boat load when the housing market collapsed. I have only 1 house now. I have no problem if the FED and the banks crater the market again.
I need to you to think about that? The idea the FED can lower rates in the future by raising them now might make sense during a strong expansion. But it makes little sense after the long weak expansion we just had... when you see a recession in the near future.
The FED screwed up this economy... we don't need them falling back on their old tricks.
We need better thinking.
I agree rates are historically low.
The FED allowed the banks to screw this economy into the ground with mal investment due to cheap money.
We have had to keep rates low because we have had a fake economy propped up by stock prices and low rates. The base of the economy needs to rebuild. Let increasing wages and oil prices be the natural brakes. Let the bond market be the break as it has to eat up the govt debt.
Now that is my opinion and it has nothing to do with Trump.
As far as my money / business... I made a boat load (for me) after losing a boat load when the housing market collapsed. I have only 1 house now. I have no problem if the FED and the banks crater the market again.
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If you look back at the recent history of the Fed, they have consistently acted to undermine republican presidents. It happened with Bush 41, allowing Clinton to run against the "Bush recession", even though the economy was in fact recovering. It happened at the end of Bush 43's second term, when the idiot Bernanke raised rates precipitously after allowing a housing bubble to inflate on his watch. The Fed then graciously undertook a zero interest rate policy for the entire eight years of Obama's disastrous presidency, allowing him to run up monstrous debt and brag about an economy that was in fact suffering from his policy mistakes. Barely a year after Trump took office the Fed was back to raising rates, even though inflation is nonexistent.
The Fed's current obsession with raising rates happens to directly undermine Trump's two biggest economic success stories. One is raising the incomes of his working class base. Obama's economy made Wall Street and Silicon Valley execs rich, and of course they showered him with money in response. Wage earners were a different story. They saw their jobs sent overseas or replaced with cheap immigrants. The Fed paradoxically is fixated on wage costs as justification for raising rates. So to the extent Trump helps the working class, the Fed tries to take it away. This shows some real chutzpah since they were so desperate to bail out the bankers, whatever the cost.
Trump's other economic success story, forcing the Chinese to bend the knee on trade, is also directly undermined by the Fed. As rates go up, so does the dollar, and the effect of Trump's tariffs is negated. In effect, we are manipulating the Chinese's currency for them. Or to put it another way, one part of the government has its foot on the accelerator while the other is on the brakes.
The stock market is scared and rightly so. The Fed has a terrible record and has repeatedly made the exact same policy mistake that seems on the launching pad now. By using lagging data like employment stats, they tighten for too long and create a recession. In this case, that recession should coincide nicely with the 2020 elections. Accident? Bad luck? Once or twice, maybe. When it happens election after election, you begin to wonder if the "career professionals" at the Fed are as politicized as their counterparts at the DOJ, IRS and FBI.
The Fed's current obsession with raising rates happens to directly undermine Trump's two biggest economic success stories. One is raising the incomes of his working class base. Obama's economy made Wall Street and Silicon Valley execs rich, and of course they showered him with money in response. Wage earners were a different story. They saw their jobs sent overseas or replaced with cheap immigrants. The Fed paradoxically is fixated on wage costs as justification for raising rates. So to the extent Trump helps the working class, the Fed tries to take it away. This shows some real chutzpah since they were so desperate to bail out the bankers, whatever the cost.
Trump's other economic success story, forcing the Chinese to bend the knee on trade, is also directly undermined by the Fed. As rates go up, so does the dollar, and the effect of Trump's tariffs is negated. In effect, we are manipulating the Chinese's currency for them. Or to put it another way, one part of the government has its foot on the accelerator while the other is on the brakes.
The stock market is scared and rightly so. The Fed has a terrible record and has repeatedly made the exact same policy mistake that seems on the launching pad now. By using lagging data like employment stats, they tighten for too long and create a recession. In this case, that recession should coincide nicely with the 2020 elections. Accident? Bad luck? Once or twice, maybe. When it happens election after election, you begin to wonder if the "career professionals" at the Fed are as politicized as their counterparts at the DOJ, IRS and FBI.
And yet a controlled burn is sometimes what you have to do.
It was Yellen, and mostly Bernanke that got us here. Powell is trying to restore sanity.
We have bigger problems if a Fed rate of 2.5% is going to kill an economy.
I sold RE back when the prime hit 21%. I remember sitting at the table while my buyers signed a 30 year mortgage at 14% with 7 points split between buyer and seller.
Powell's hand was forced. He's behind the curve and he knows it. So next year we get to 3-3.5%. That's still pretty low, imo. I'll be tickled pink if I can get a 10 yr note at 4.5-5% in the next few years
I sold RE back when the prime hit 21%. I remember sitting at the table while my buyers signed a 30 year mortgage at 14% with 7 points split between buyer and seller.
Powell's hand was forced. He's behind the curve and he knows it. So next year we get to 3-3.5%. That's still pretty low, imo. I'll be tickled pink if I can get a 10 yr note at 4.5-5% in the next few years
Recessions are normal and healthy, the rid the economy of not only malinvestment but also of Republican presidents.
All of this talk about rates being historically low or high is nonsense. Rates are what they need to be at a certain time. Rates were higher in the past because of inflation, we do not have the inflation of the 1970s and the unemployment of the 1980s.
The Fed did not ruin jack shit, they abided their mandate in place of republicans being unwilling to use the government because they are stuck on some outdated and plain old stupid ideology.
The Fed does need to increase rates for the coming slowdown and they do need to unload some of the balance sheet to reload it later.
You all underestimate the damage republicans have done because you just don’t care about math and believe in magic beans.
Trumps economy is a cotton candy economy. The kids ran out the sugar high of tax cuts and are falling asleep in the backseat now. Look at what FedEx is projecting for next year with all the problems associated with instability and trade and debt.
We are screwed and the republicans are fucking crazy and will be no help, this stalling the government and stagnating the economy. The Fed is the only hope we will have because of political insanity. They must load rates and reduce the balance sheet.
I highly doubt any one can make a logical argument that the Fed can cause a recession. A recession is not a down stock market, who gives a crap about that. If going up to a humungous level of 2.5% is going to tank the economy then it was teetering on the brink anyway.
Obama is not responsible for the recovery just as Bush was not responsible for the housing crisis/recession. Presidents just pass on through and grab credit for shit they had nothing to do with so the Fed's actions likewise have no direct effect on a President's magical plans.
The Fed raised rates .25.....we are still light years away from the economy halting, brakes on growth levels of 7 to 10%.
Obama is not responsible for the recovery just as Bush was not responsible for the housing crisis/recession. Presidents just pass on through and grab credit for shit they had nothing to do with so the Fed's actions likewise have no direct effect on a President's magical plans.
The Fed raised rates .25.....we are still light years away from the economy halting, brakes on growth levels of 7 to 10%.
The 2-10 yield curve is close to inverted. That is the bond market's way of yelling "WTF man" at the Fed. Keep going and it will invert and that is game over. The Fed is on dangerous ground here. Trump may end up shrugging all this off and winning reelection. Then he would be in a position to clip the Fed's wings for good.
An independent Fed, like an independent judiciary, is a noble ideal. Neither is working out very well. We can't even have a non-biased public broadcasting service.
An independent Fed, like an independent judiciary, is a noble ideal. Neither is working out very well. We can't even have a non-biased public broadcasting service.
Although I have studied this extensively... I don't the time to explain... luckily a five second google search found this at the top....
"While the answer to the first part remains elusive, and to Goldman it is still relatively low, the answer for the second part is clear: in the post WW2, virtually every recession (and depression) was caused by the Fed.
Goldman starts with a historical overview of the causes of recessions. Looking at 33 US recessions since the 1850s, it finds that while many pre-WW2 recessions originated in the financial sector, most post-WW2 recessions were caused by monetary policy tightening and oil shocks and, and sentiment-driven swings in borrowing and investment led to recessions in both eras. A similar IMF study of the key contributors to 122 advanced economy recessions shows that even before 2008, financial crises were a fairly common source of modern recessions too."
https://www.zerohedge.com/news/2017-06-24/goldman-finds-most-modern-recessions-were-caused-fed
Fed tightening usually ends with a event....
https://www.zerohedge.com/news/2017-06-24/goldman-finds-most-modern-recessions-were-caused-fed
"While the answer to the first part remains elusive, and to Goldman it is still relatively low, the answer for the second part is clear: in the post WW2, virtually every recession (and depression) was caused by the Fed.
Goldman starts with a historical overview of the causes of recessions. Looking at 33 US recessions since the 1850s, it finds that while many pre-WW2 recessions originated in the financial sector, most post-WW2 recessions were caused by monetary policy tightening and oil shocks and, and sentiment-driven swings in borrowing and investment led to recessions in both eras. A similar IMF study of the key contributors to 122 advanced economy recessions shows that even before 2008, financial crises were a fairly common source of modern recessions too."
https://www.zerohedge.com/news/2017-06-24/goldman-finds-most-modern-recessions-were-caused-fed
Fed tightening usually ends with a event....
https://www.zerohedge.com/news/2017-06-24/goldman-finds-most-modern-recessions-were-caused-fed