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Fed monetary policy

Discussion in 'Too Hot for Swamp Gas' started by okeechobee, Sep 29, 2022.

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  1. Sep 30, 2022 #41
    okeechobee

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    You stated we hit a 5-month low on UE claims, as if we weren't going to see any jobs fallout from the rate hikes. If that's not why you mentioned UE claims, I'm not sure why you did? I think I've been pretty clear up until now, the issue I have is not with raising rates. In fact, I've stated they should have been raised much earlier. I believe the issue many of us have is the Fed completely whiffing on inflation, calling it "transitory" when it was clearly not and then doubling down on that stance and driving up a massive asset bubble. In doing so, they completely dismissed any of their actions as contributing factors. I think most of us agree their actions were very much contributing factors to the inflation.

    The Fed started hiking well before 1982 and it took years to rid the economy of endemic inflation. 1982 was merely the final year of some pretty extreme efforts to get rid of inflation. Part of the reason the Fed is in such a panic mode today.
     
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  2. Sep 30, 2022 #42
    docspor

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    I mentioned the low UE to make the pt that UE should be the least of our worries. without the focus on UE (dual mandate), the fed woulda started earlier. Maybe you can invent a time machine so the FED can time everything perfectly. BTW, the massive asset bubble predates inflation.
     
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  3. Oct 1, 2022 #43
    AgingGator

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    Agree. One of the few good things to come from all of this is that I will be able to load up on some good bonds over the next 18 months that should get me a good 8-10% annual return for at least the first decade or so of my retirement.

    Good luck with the properties. I wouldn’t chase anything right now but if you pick things up at good value; back up the truck and load up! Prices may fall a little more in the short term but you’ll be sitting pretty in the long run.
     
  4. Oct 1, 2022 #44
    G8R92

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    Disagree. It was liquidity (free and easy money) that drove up real estate prices and subsequently rentals. Housing is a commodity to Wall Street.

    Like a Moneyball meme, the current labor pool is below the 50' of crap, so a little unemployment is welcome to me as a small business owner.
     
  5. Oct 1, 2022 #45
    citygator

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    Not accurate at all.
     
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  6. Oct 1, 2022 #46
    okeechobee

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    Well, I think expecting perfection and a time machine are obviously unrealistic, but at the same time, this is what they do for a living. It's their responsibility. The truth is we had an inflation problem and they were dismissive. The skeptic in me says they were dismissive, because admitting an inflation problem then would have been an admission their policy was wrong. As time moved forward and it become clear the inflation was not transitory, they shifted to the war in Ukraine and supply chain issues in China as the culprit. While I don't doubt those two issues have hurt, it seems irresponsible to me for them to completely discount the injection of trillions of dollars into the economy as one of the chief culprits. If the Fed doesn't learn from their mistakes and take ownership, they will simply keep repeating them. They've said inflation is now a product of supply chain and Ukraine, but why should we believe them when they missed the boat on inflation altogether just a few months ago? It's a smokescreen.
     
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  7. Oct 1, 2022 #47
    okeechobee

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    Providing liquidity for a short time made sense. Once the economic activity bounced off its lows and once it became apparent that we had vaccines that worked, they had an economy in rapid recovery. They could have at least stopped the QE at that point and kept rates at 0 as a pre-cautionary. The QE is what led to the massive asset bubbles. And you saw that play out, because as soon as the Fed announced QE was ending, what happened to stocks? We're now to the point where Fed is creating bubbles everybody knows will burst as soon as they remove their support. That ain't good.
     
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  8. Oct 1, 2022 #48
    G8R92

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  9. Oct 2, 2022 #49
    Gatorrick22

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    The fed policy? They print the money... the groomers in congress spend it... and We The People pay for it.
     
  10. Oct 2, 2022 #50
    AgingGator

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    Are you referring to the Fed or to citygator?
     
  11. Oct 3, 2022 #51
    l_boy

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    I am supportive of the tightening. Inflation is not a good thing and if it isn’t stopped it will wreak havoc.

    In retrospect they probably should have tightened earlier.

    Part of the problem is they are trying to offset the general incompetence of our fiscal policy. The size of the Covid relief package was way too big. The size of the 2008 fiscal stimulus was arguably too small.


    The British central bank response was due to the markets complete lack of confidence in the new Prime ministers idiotic fiscal policy proposals. They are now suffering inflation worse than us probably due to Ukraine war, but in spite of that, Truss’s finance minister proposed tax cuts, coupled with no spending cuts. This is idiotic. The currency collapsed 25% which is arguably a crisis and would have made inflation worse. The British central bank intervened to prop up the British pound. They are reacting to dumb political moves.


    The fed is having to signal that they are going to stick with the anti inflation actions. If the market thinks they will reverse rapidly then the actions they are taking won’t really work. Powell came in around 2017 wanting to tighten by tapering down bond acquisition (QE) without inflation, but tried and the markets freaked out via the “taper tantrum” and then Powell took heat and backed down. Now he has to establish he has a back bone, like his supposed idol Paul Volcker.
     
  12. Oct 3, 2022 #52
    AgingGator

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    Agree. Every Fed chairman since Volcker has catered to Wall Street. Walk Street is not the Main Street economy.
    Hopefully, Powell finds a backbone and a pair and continues to do what needs to be done. He should have started before the election in 2020. Both sides supported more nonsensical Covid spending so he couldn’t have been accused of political motives. Since he didn’t, he absolutely should have done it immediately after the election. People need to realize that stupid is as stupid does and we did a shitload of stupid in 2020 and 2021.

    This all would have been so easy to avoid with a little common sense. Instead we will be dealing with the aftermath of stupid government Covid policies for several more years.
     
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  13. Oct 3, 2022 #53
    okeechobee

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    I was responding to docspor, but my comments were directed towards the Fed.
     
    Last edited: Oct 3, 2022
  14. Oct 3, 2022 #54
    okeechobee

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    This is pretty much the gist of my original post. The Fed is allowing public sentiment (whichever form that may take) to sway their decision making and this a huge problem, for obvious reasons. They kept their foot on the pedal until we reached max employment, which is not consistent with their previous actions. Let us remember as well that without the Covid recession, we were still overdue for a major recession based on historical cycles. Between the Federal Reserve and federal government, they attempted to wipe out any and all ill effects of the pandemic. In short, the economy should be allowed to cycle. The Covid recession was not a natural economic recession. The economy is still long overdue for a reset.
     
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