Here we go again boys and girls.
It’s that time where our monetary overlords step down from the mountaintops and bequeath upon us their rulings from up high.
And as usual, Jay Powell and Company will probably FUBAR this beyond belief.
These pages have been harping on Powell’s weird apparent infatuation to be remembered like Paul Volcker and to be honest, he has not disappointed this author.
Thus today’s action will more than likely be the much rumored “hawkish cut” where the FOMC reduces the Fed Funds rate by another 25 bps, then freezes rates to see what happens when the new administration takes office.
Nick Timaros tipped everyone off on December 16th in this editorial via the Wall Street Journal (no paywall).
The key excerpt from the article linked above is here:
A few officials have suggested they would argue against cutting this week. These “hawks” are fearful of squandering the Fed’s credibility by allowing inflation to remain well above their target for a fourth or fifth year.
Inflation is not tamed, unemployment in reality is creeping higher, and the Fed has no real control over the speculative market mania. The question becomes is this like Mr. Volcker and a repeat of their “hawkish” cut from July of 1980?
Let’s board the way back machine and read an excerpt from the FOMC statement from the July 1980 meeting:
The belief was that the first cuts accelerated monetary growth in June but inflation was in a tolerable range. Yet the Fed proceeded with a cautionary cut because fears about growth in 1981 were permeating the committee’s thinking.
And yes Virginia there is a Santa Claus and the Fed engaged in quantitative easing in 1980 also as the statement says further on:
The history of their actions and reactions after that was obvious when the actions were updated and published in 2019:
As inflation spiraled out of control from August through the end of 1980, interest rates were ratcheted up at a torrid pace as Volcker truly felt the Federal Reserve had lost control of the monetary system.
Amazing how the three cuts in the summer of 1980 start to look vaguely political and familiar akin to the cuts engaged in by Jay Powell & Co. during this election cycle.
This is why I believe that the cut tomorrow will be similar to the cut engaged in by Volcker in July of 1980 and the end results will be the same. An attempt by Powell to maintain the speculative bubble and ease credit conditions for the 20% while the lower 80% of the US population foots the bill via more restrictive credit access, an inability to purchase a home or auto due to affordability, and higher daily consumable and necessity inflation.
The smart move would have been a 25 basis point increase, but since when as the modern politicized Fed ever engaged in a “smart move” until the house is on fire and then and only then do they put the gasoline and matches down.
Prepare for 2025 to mark the start of the most stagflationary era since the cyclical boom-bust decade of the 1970s.
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The owners of the Federal Reserve don't care about the money. They have no fear of lack of profitability. They OWN the country. They own the financial systems of many countries. They are just allowing things to continue while they manipulate things toward a one world government. America is long past bankrupt.
If you had our balance sheet and walked into a loan officer and asked for a loan, would you qualify? No.
Who actually knows what " Monetizing the debt" actually is? How many times have we seen it happen? Imagine you realize that unless you make a house payment, two car payments and pay on some credit cards, you're about to a homeless pedestrian. You GOTTA have thirty grand. You take your hot rod classic car and boat to the auction.
Nobody bids. You Cut a Check for thirty grand, buy them yourself. You go home and Use the Thirty grand check you paid yourself to pay the bills.
You Monetized your debt.
The government does not own the federal Reserve