Danielle DiMartino Booth claims the Fed should be cutting more, not less. I have a different suggestion.
Fed Needs Bigger Rate Cut Cycle, Concerns of ‘Back-Peddling’
Danielle DiMartino Booth says Fed Needs Bigger Rate Cut Cycle, Concerns of ‘Back-Peddling’
Danielle DiMartino Booth says the Fed’s rate cut projections aren’t strong enough, warning the FOMC will “eat its word” after touting a strong economy. She argues the job market doesn’t show as rosy of a picture as Jerome Powell paints.
I some sympathy for a part of that, a lot of sympathy for another part, an no sympathy at all for one part.
I strongly agree with Booth on the jobs picture. Heck, I have pretty much been leading the way in my posts.
Regarding the economy, I called for recession in May or June. Without some serious revisions we are looking at 2025.
But Booth thought it began in October of 2023 and to that I repeatedly said no. I joined the recession club in May.
“The Fed Will Eat Its Word”
Yep, but when? More importantly how?
Q: Is there zero chance Trump does not set off another round of inflation causing the Fed to hike?
A: No
What is the Inflation Outlook?
- Powell Doesn’t Know
- Booth Doesn’t Know
- I Don’t Know
- Because Nobody Knows
Inflation has been much more stubborn than Booth has figured since October 2023.
While I have also predicted a recession, but 7 months later than Booth, I have also been very concerned about what Trump might do.
And I am also very concerned about noneconomic indicators like “Fartcoin” have to say about speculation.
In the last year, Fartcoin has gone from nearly zero to $1.25. The entire stock market is going crazy.
Rampant speculation is a sign of monetary policy that is too loose.
Reflections on the Fed
- The Fed looks like a pack of idiots because they are a pack of idiots.
- QE to infinity froze the housing market. And it’s been frozen for a few years.
- The Bernanke Fed denied a housing recession even after it started.
- The Powell Fed somehow did not understand that three rounds of the most massive fiscal stimulus in history coupled with interest rates at zero and QE would cause inflation.
- How many times did these clowns use the word “transitory”
And now the Fed has reversed again.
Q: Why did the Fed cut in December?
A: Because its silly forward guidance said it would.
Sorry Danielle, there is no other reason.
So no, the Fed should not be promising more cuts, because it ought to shut its mouth and not pontificate on what’s ahead.
A Hawkish Fed Projects More Inflation, Fewer Interest Rate Cuts in 2025
On December 18, I commented A Hawkish Fed Projects More Inflation, Fewer Interest Rate Cuts in 2025
This Fed does not follow the data, does not serve the public, and has singlehandedly destroyed the housing market with an unwise mix of QE to infinity and rate cutting madness.
Higher inflation expectations coupled with today’s interest rate cut makes little sense. Nonetheless, the Fed cut rates today with only one dissent.
Galling FOMC Statement
Here’s some galling drivel from the Fed …
Everything we do is in service to our public mission. We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions.
Mercy!
What self-serving nonsense, necessitated by its reversal.
Two Recession Indicators, What Do They Say Now?
Yesterday, I noted Two Recession Indicators, What Do They Say Now?
A pair of very reliable Indicators still suggest recession.
But will it be a stagflation recession with higher interest rates or will it be a deflationary recession?
How about no recession at all with Trump blasting inflation higher until the Fed acts to force one? All of the above are possible outcomes.
The Fed projects years ahead when the Fed cannot even see three months ahead.
The result is more speculation and front running of what the Fed says (despite the fact the Fed is clueless).
My Strong Suggestion
Dear Fed, STFU already with your foolish forward guidance.
Then when you do whatever stupid thing you want instead of following the data (like you claim you do), you won’t look so ridiculous.
Regarding Jobs
June 6, 2024: How Much Does the BLS Overstate Monthly Jobs? Here’s the Answer
November 20: Quarterly QCEW Data Provides More Evidence of BLS Jobs Overstatement
Hard evidence from QCEW report suggests more negative revisions coming for BLS nonfarm payroll report.
However, that does not guarantee anything specific about inflation, as the Fed found out, and I have been saying for months.