JimBowie1958
Old Fogey
- Sep 25, 2011
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The Federal Reserve is doing its job to moderate the markets and try to stabilize the economy, dampening down the roaring economy and trying to pump up slow economies. This is why they generally are raising rates during Republican administrations and lowering them during Dimocratic administrations.
So just chillax guys and short the markets for a bit.
Bah, Humbug! Fed Chair Jerome Powell Gives America Financial Panic for Christmas | Breitbart
So just chillax guys and short the markets for a bit.
Bah, Humbug! Fed Chair Jerome Powell Gives America Financial Panic for Christmas | Breitbart
While almost all of the data — aside from the stock markets — still point to a robust economy, the rising interest rates have evidently weighed heavily on companies that took out large amounts of debt during the long period of quantitative easing that followed the Great Recession of 2007-9.
So despite the strongest job market in decades, rising wages, and economic growth well above three percent, Wall Street worries about liquidity threaten to put an end to the good times — thanks, in large part, to Powell and the Fed.
Some Trump supporters could be forgiven for suspecting a political motive — especially since some noted Trump-haters celebrated the market slide in the hope it will “shake Republican support for Trump.” The drop in confidence also coincided with Democrats winning the U.S. House in November, promising tax hikes and more regulations.
Ironically, the Fed may be doing exactly what it is supposed to do, according to the basic doctrines of Economics 101. Students in high school economics courses are taught the famous dictum of Fed chair William McChesney Martin, which is that the Fed’s job is “to take away the punch bowl just as the party gets going” — i.e. to slow exuberant markets lest they overheat and crash. Better to come down slowly than all at once, the thinking goes.
Likewise, the Fed may also be taking advantage of the strong economy to disentangle itself from private industry, and to build up interest rates that it can lower later in a recession. The danger is that Powell may be doing too much too quickly — leading to the very recession the Fed’s actions, theoretically, are supposed to prevent.
So despite the strongest job market in decades, rising wages, and economic growth well above three percent, Wall Street worries about liquidity threaten to put an end to the good times — thanks, in large part, to Powell and the Fed.
Some Trump supporters could be forgiven for suspecting a political motive — especially since some noted Trump-haters celebrated the market slide in the hope it will “shake Republican support for Trump.” The drop in confidence also coincided with Democrats winning the U.S. House in November, promising tax hikes and more regulations.
Ironically, the Fed may be doing exactly what it is supposed to do, according to the basic doctrines of Economics 101. Students in high school economics courses are taught the famous dictum of Fed chair William McChesney Martin, which is that the Fed’s job is “to take away the punch bowl just as the party gets going” — i.e. to slow exuberant markets lest they overheat and crash. Better to come down slowly than all at once, the thinking goes.
Likewise, the Fed may also be taking advantage of the strong economy to disentangle itself from private industry, and to build up interest rates that it can lower later in a recession. The danger is that Powell may be doing too much too quickly — leading to the very recession the Fed’s actions, theoretically, are supposed to prevent.
