Janet was sent out to give the market a nudge back, mission accomplished. The idea that they could raise interest rates in the middle of this shit storm is non sensical. Why would you raise interest rates and print money for a massive stimulus plan at the same time
Because one is fiscal and the other is monetary. You raise interest rates to slow inflation and to slow down asset bubbles and lending that can destroy a country. Monthly qe purchases should end tomorrow, along with raising rates off the floor, there is no continued justification for it. QE has created an all time bubble.
The treasury can still issue debt for fiscal spending.
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Usually takes a dive at the same time the NASDAQ does, even though the great majority of crypto holders aren’t watching the stock markets.
Why would you raise interest rates when we are facing into an economic shit storm?
JPM is launching a crypto fund this summer. Institutional funds are now involved. Tesla owns 1.5b, it’s become an interconnected market with traditional marets
The stimulus plans to date are funded by debt, not by printing new money. There is already significant inflation, whether it gets out of hand is another question. Raw material prices in the US have surged in the past quarter, one of the things driving home prices upward. Interesting times ahead.
What in God’s name are you talking about? GDP in the US will hit records this year. You raise interest rates for reasons I just explained : to slow inflation, to take the heat out of huge asset markets which if they collapse can bring in national crises. The Wilshere 5000 is now twice GDP due to the asset bubble created by qe/low ir. The inequality in wealth has dramitically increased in 12 months because of the continued rates program. It’s madness.
The Bank of Canada just raised two weeks ago for this very reason, it’s on the cards in June. Jay Powell is a coward and is reluctant to do anything to disturb markets before his term is up.
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The fed lies and distorts inflation reality through the metrics it decides to use. Inflation above 2% is here. Yellen was kite flying giving the markets a steer because food, energy and housing are rising materially that can’t be hand waved away.
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Because they will have no choice when inflation picks up more and they can’t lie about it anymore. The average cost of a new home rose $24k in February due to raw material increases, that’s now $36k as of this week. We are headed for high inflation, much faster than the Fed admit.
I agree, the QE has distorted markets to a ridiculous extent, but they are fucked now, because raising interest rates at the time when the World most needs loose policy would be a disaster.
IMO the full extent of the damage that covid has done to economies has yet to come out in the wash, it could be a couple of years before we see it fully.
They are backed into a corner now because they have already got historically low interest rates and a wall of cash washing around. They have no bullets left in the gun. People have been warning about it for years that they had nothing in reserve if the shit hit the fan. They should have pulled the brake years ago. But it wasn’t politically palatable. Pulling it now would be very dangerous
Pump crash, pump crash, pump crash. The cycles are getting shorter
Time to switch pension funds to risk 2?
Is accepted economic theory a cod?
We’ve had low interest rates for 20 years now.
Economic theory would suggest that when you print money you cause massive inflation but that has not manifested itself.
Because almost none of the money went into the real economy. It went to the banks mostly which ended up driving asset prices up and making big investors 10X richer. The current stimulus plans are going into the real economy at a time when supply chains are fucked and getting more fucked by the day.
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Bond funds could be in for an awful rattling
Cash so
Commodities.
We haven’t had 0 or negative rates for 20 years. Inflation is now here in consumables, food and energy and has being growing rapidly in housing markets. Some preferred inflation measures ignore house prices. House prices to average wages are at highs.
There’s also the fact that technology is deflationary, this has acted like gravity pulling down costs everywhere but the last 12 months and forward is busting through that force. Asset price bubble, housing out of reach, food energy increases, pent up demand, cash savings. A loaf of bread is going to be 50 dollars unless something changes shortly
We might need to reimagine the whole thing altogether. Marx was right
Yeah the effect of technology has been huge.
Food seems to have never been cheaper - certainly in this part of the world. Too cheap even