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  • The Federal Reserve-Created Mess [View article]
    "The Federal Reserve thought that it was going to calm markets by keeping short-term interest rates constant."

    It was an economic decision. I doubt that markets going up then down then somewhere I know not had much to do with it. Everything roils markets. Nothing roils markets. If the Fed has concern at all about the daily meanderings of markets they should write articles for SA, where every tiny wiggle is interpreted in apocalyptic terms. No, I'll wager Fed thoughts are focused elsewhere.

    "The Federal Reserve is going to have to get its act in order and work to stabilize markets and not become an engine of greater "financial and economic instability"."

    The system is dynamically unstable. People talk about financial instability to make it look like they know something. It's a "tell", which is ironical. :-)
    Sep 18, 2015. 10:08 AM | 4 Likes Like |Link to Comment
  • Budget Deficit On Track For 2% Of GDP [View article]

    About estate and inheritance taxes: Allowing them to fall on anyone who isn't rich would be no part of the real aim, which is to reduce the drag of plutocratic wealth accumulation and its democracy killing consequences. If we allow extreme wealth to grow unhampered the wealth cartel will give dollars the vote (money is "speech"). This is not a dream, this is really happening.
    Sep 18, 2015. 09:57 AM | Likes Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article]
    Was referring to the comment of Mr. Palms, not Mr. Doubt.
    Sep 17, 2015. 07:51 PM | Likes Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article] this a "New Porter Stansberry Scareware Now In Effect" kind of thing? Ol' Porter don't need no new tricks, the old ones still work fine. P.T. Barnum would be proud.
    Sep 17, 2015. 07:41 PM | Likes Like |Link to Comment
  • Stocks and bonds in the green as Fed holds policy steady [View news story]
    "FED should've raised to 0.5% and called it a day until 2017 or incredible economic expansion."

    If they're going to call it a day until 2017 or incredible economic expansion why raise rates 0.5% now? Why not cut to the chase? All we'd have to do is cut taxes and increase spending, then we wouldn't have to endure all this pointless "shrink to grow" in the interim.

    Of course if you don't want more expansion you can raise rates to your hearts content. But be sure now, is that what you want?
    Sep 17, 2015. 02:32 PM | 1 Like Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article]
    "PS. I'll add for the umpteenth time, the economy is constrained by policies that have emanated from the executive and legislative branches and cannot be fixed any further by monetary policy."

    Yes, and further the Fed trying to force the administered rate higher above the real rate looks like asking for trouble, even if the magnitude is initially small. They're not supposed to do that in an economy as slow as this. Why should we try to cool off an economy that's not anywhere near overheating?

    I think policy makers are applying methods from a positive commodity shock world ('70s) to a negative commodity shock world (now). The '70s, we now know, were an outlier. Trying to prevent a wage/price spiral is ludicrous in today's environment, a massive misreading of our true situation.
    Sep 17, 2015. 12:40 PM | 1 Like Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article]
    "They've really gotten themselves into the biggest pickle of all time."

    Not really. They could sell securities to "overheat" the economy like the article says. Will taking money out of the economy do that? Perhaps not, but then you raise rates to slow the economy, right? So if that's what you want, then "overheating" not working should be just fine. If you really wanted to screw things up you'd have to cut taxes. Remitting money to the Treasury is more like a tax increase. All in favor..... :-)
    Sep 17, 2015. 11:57 AM | 1 Like Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article]
    "The point is that this is not a normal rate hike, the FEDs balance sheet is massive... hence proof of concept."

    The part that concerns me is not a matter of whether the concept behind new methods of controlling interest rates will work, it's whether higher rates used to slow a slow economy further is a concept that needs proving. I say it doesn't. We'll slow further with a hike whether the new methods do additional damage or not. The latter concept needs proving, it's just not an experiment worth doing now. Besides, as the article points out the Fed will improvise its way to higher rates whether that proves a particular concept of how or not.
    Sep 17, 2015. 11:40 AM | 1 Like Like |Link to Comment
  • A Rate Hike Amid Modest Growth Expectations? [View article]
    Barry Ritholtz has a little chart on Bloomberg with a catchy title.

    "Low Interest Rates Have Forced Asset Managers to Waive Billions of Dollars in Fees."
    Sep 17, 2015. 09:15 AM | 1 Like Like |Link to Comment
  • A Rate Hike Amid Modest Growth Expectations? [View article]
    "According to estimates by Mark Zandi, chief economist of Moody's Analytics, even a quarter-point hike would take a toll, if only slightly. "It would have a meaningful but modest effect on growth," he says."

    Observations plucked from the observation tree:

    1) If you have a headache, don't hit your head with a hammer, even a little one with a modest effect.

    2) That you can take a little more pain without screaming in agony isn't a good enough reason to inflict it on yourself.

    3) A slow growing economy doesn't need more slowing.

    4) "It's time" isn't a counterargument.

    5) Slowing the economy to obtain policy room makes no sense. "Hike now to cut later" means that while we're too scared to grow faster now, we won't be in the future. The recent past, along with our present deficit at sub-Maastricht level, casts doubt on "nonsense now, sense later".

    6) The tax take is eating our growth alive. This is the Big Hammer.
    Sep 17, 2015. 09:00 AM | 1 Like Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article]
    "The FED should raise rates for purposes of fiscal flexibility and also as a proof-of-concept that their tightening mechanisms in this scenario will actually work."

    It's not a concept that needs proving. We already know that tightening works to slow the economy, and why we shouldn't do it. What we don't know is why people think we should do it anyway, because the reasons given are kind of preposterous, like "it's time" or "if we wait too long.....". These are placeholder reasons for when you don't got one, but are determined to proceed as though you did.
    Sep 16, 2015. 05:10 PM | Likes Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article]
    If the Fed doesn't raise rates this year it probably means they are discounting positive spin. They see the same thing most non-Wall Streeters see, an economy too soft to slow further. No extra factors are needed to explain their stance, no spin in either direction. I expect what they'll do when they finally do it will be pretty transparent to causes.
    Sep 16, 2015. 01:08 PM | Likes Like |Link to Comment
  • The Worst-Case Scenario For The Fed [View article]
    "If the Fed is determined to raise rates, the time to do it is now, for delaying much longer may lead to their clock finally running out."

    IOW if they don't do it soon the clock will show why it was a bad idea, so we better do it now. The problem with this is that raising rates is already known to be a bad idea, unless you think the economy really needs to be slowed further. Everyone who thinks that, raise your hand.

    (counts hands....)

    See, from reading articles and comments here I get the impression people are generally aware of how inadequate the recovery has been and still is. There are to be sure nonspecious arguments that the economy is poised for liftoff, but whether this view is correct or not it still makes no sense to abort the possibility now with an unwise rate hike. Far better to be late and allow the cycle to go full blast than to terminate it before we get the benefit of moving into the post recovery boom phase.
    Sep 16, 2015. 12:44 PM | 1 Like Like |Link to Comment
  • The Beauty Of Truth And The Beast Of Dogma [View article]
    "Instead, monetary variables are largely predicted by past values of non-monetary variables (such as GDP, employment and inflation)."

    Yes, and for this reason directly targeting GDP, employment and inflation by fiscal means should be the primary policy tool with monetary policy in a supportive role. We're trying to grow, while fiscal policy predicts, correctly, that we're not growing enough, and efforts to predict this result from Fed policy alone will continue to fail from ignoring tax/spend fundamentals that are the big movers.

    This isn't an argument for the Fed to change course, it's an argument for a growth policy that uses the best tools for the fight. I don't want higher rates, I want the conditions for higher rates, an economy growing faster, and then higher rates will be as supportive of sound policy as keeping them low is now. If fiscal policy joins the fight we'll have better results to predict, but until then taking into account fiscal policy will at least allows us to predict better.
    Sep 15, 2015. 09:57 AM | 1 Like Like |Link to Comment
  • Budget Deficit On Track For 2% Of GDP [View article]
    "The CBO was predicting a decade of surpluses after Clinton left office so how is this possible??"

    It wasn't possible. History says surpluses are the kind of disaster that "cures" itself. Public surplus takes money out of the economy until it crashes down to where public deficits put it back, doing entirely unnecessary damage since it would be easy to supply spending to prevent it.

    Bush spent for a war, cut taxes, increased benefits and that arrested the fall but it wasn't enough. As the economy falls the part that falls the least is comparatively "bubbly" so when it finally falls from deregulation, fraud and so on everything goes. This incipient depression was a little different from previous surplus driven collapses in arriving in two stages years apart.

    The lesson should be that we could have stopped it, but then we always could stop it, or better yet prevent the circumstances that give rise to depressions by always giving the economy a higher priority than a budget balance. Providing what the economy needs is never wrong. It's how you define what's right.

    "I am pretty sure Canada paid down its debt in absolute terms in the mid 2000s , going to check ."

    It hasn't done that. I checked. Do you know Canadians have a debt clock, too? Like many Americans they think their economic troubles come from too much money creation. They're just as unlikely as we are to compare money in circulation to the size of the economy that uses it. Hey, if it has too many zeros it's biiig! Big compared to what? Nah, we don't do that.
    Sep 14, 2015. 07:25 PM | 2 Likes Like |Link to Comment