Both compliments of MarketWatch, this morning’s Debt Zombies article I highlighted was something that I thought highly of, obviously. The writer is no b/s and clear. The “debt Zombies” theme was appropriate to an honest and rational view of what’s going on beneath the surface of the “fantastic” economy.
From the same media source however, comes the goofy conclusion that Fed rate cuts will help the middle class.
This kind of thing makes me want to take to the street and scream out to the 4 winds how fucking convoluted and misleading the discussion is on the Fed, inflation and its ultimate effects. Like how Ben Bernanke, the man who fomented this mess while bailing out Greenspan’s mess, was anointed thusly when really he was a macro parlor tickster, not a hero.
This article’s subtitle? With no bubbles and no inflation, why not let more people earn higher wages?
The Fed is in the process of manufacturing inflation, that’s why. Some of it may well be pushed into peoples’ wages, before the mass layoffs that’ll be kicked along with the can down the road. But it is inflation that over time compromises the middle class and increases the separation between it and the wealthy (investor and asset owner class). So, nice short-term thinking there Mr. Author.
Apparently Trump and that foremost economic thinker AOC are in agreement…
It’s not often that Donald Trump, Alexandria Ocasio-Cortez and the stock market all agree on something — but now they’re of one mind about lowering interest rates as soon as the Federal Reserve’s next meeting at the end of this month, even in a near full-employment economy.
And then there is this…
There are two reasons to cut rates, at any given time — because you can, and because you have to. Inflation hawks and those temperamentally prone to look for the next bubble press for rate cuts only when they’re necessary — in extreme cases like 2008, or a more-moderate slowdowns like the one following 2000’s tech-stock bust.
Now we’re at a time where Fed Chair Jerome Powell signaled Wednesday that the central bank will cut rates mostly because it can — there are no bubbles, and inflation is nowhere in sight. Markets will love it — but the real reason to do it is the one that Rep. Ocasio-Cortez keeps talking about.
So the rate cuts are coming because they “can”. It reminds me of the Zombies in the previous post linked above. They borrow and spend and borrow and spend some more… because they CAN.
The article goes on to talk about “no inflation” and “no bubbles”. Ha ha ha.
Here is the author right out front, on the left.
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