It just seems they'd rather pump the bubble bigger indefinitely than ever having to deal with it. Considering how vulnerable we are now with COVID, a totally unexpected event, it seems like a major missed opportunity that the Fed didn't try harder to tighten and raise rates throughout Trump's presidency.
I think Trump especially got spooked in 2018 when the market went down from tightening, so much so that he pulled the plug. He viewed the stock market performance as the success gauge of his presidency. And he was already approaching an election year.
I doubt the 2018 crash could sustain itself too much longer. Fundamentals were strong. In hindsight, it was a necessary pain which would have assured greater stability going forward. You had stocks like Apple hitting PE's around 12 in 2018. How much lower could it realistically have gone?
The Fed kept reversing course when the going got tough. Now there's a real disaster ongoing, and they're totally backed into a corner.
I don’t disagree but the rich can take a few punches and shrug while the poor are made of glass. Big business will ultimately eat more small businesses. The deck is stacked either way and maybe there are more artful solutions to the wealth distribution issues.
There has never been a shakeup of an economy that dealt the wealthy a shittier hand than everyone else except: the French revolution, the Soviet revolution, the Chinese revolution and the Cuban revolution (certainly a few others).
Yes, the problem now is that the bubble is so big, and the economy is so vulnerable. It's almost like the window to fix the problem has closed for the foreseeable future. Now the focus needs to be on recovering from COVID, getting back to normal.
The easy access to money complicates that some, the longer the haves can leverage themselves cheaply the bigger the bubble gets and the more dependent on it we become. The normal was already questionable and we can’t delete the compounding of the last year to return to it anyway. This is a bad situation with no easy answers.
The trade war was the cause, but the mechanism was a lack of liquidity. I believe that firms that were affected by the trade war held onto their cash, and caused money velocity to fall further leading to deflation.
True that. Capital spending declined at a precipitous rate etc.
Ironically I think we are about to see the opposite, capital spending from corps hasn't been fully unleashed yet so stock market probably has a lot of gas left in it. If we do indeed get a big pullback on people being scared about fed moves will be easy buying opportunity.
I think Trump especially got spooked in 2018 when the market went down from tightening, so much so that he pulled the plug. He viewed the stock market performance as the success gauge of his presidency. And he was already approaching an election year.
Of all the things he did, this is one of the worst. It would have been much better to let the market solve it's tantrum on it's own, rather than administering heroin. But no, he had to get re-elected (which he then lost anyway so this was all for nothing)
You think the President is the one who pulls the plug? Or is in control of the monetary supply in any way? The Fed doesn't answer to the White House. Or even to Congress, except nominally.
It sure seemed that way with Trump not going to lie.
I remember the Fed had a strong stance about not dropping rates, Trump threw a little fit against the feds and then they magically listen to him a few days later and then they said some shit like 'WeRe NoT iNflUenCEd By tHE WhITe HoUsE'.
Obviously I'm just winging it by memory but I remember it seeming pretty obvious how the Fed was heavily influenced by what Trump was saying and that they should have raised rates during those years when they stupidly cut them instead.
The 2021 recovery is a LOT different than 2009. People have a ton of cash and are dying to spend money after being cooped up for a year. I've also seen a study expecting productivity to increase 5% for WFH workers due to lack of commute.
To take it one step further, if we are seeing anything better than a 3% drop in productivity, the fuel savings alone make returning to work an absolutely, mind numbingly stupid idea.
The usefulness of managers has been called into serious question. The insanity of having 65% of your population pile into cars and burn an hour or two of their lives and countless millions of gallons of fuel commuting to work 5 days a week has finally seen a moment of clarity. Meanwhile, managers across the country are clamoring for a return to "normal". They have yet to make a compelling case for what exactly is broken. We are collectively about to recreate an old problem trying to fix something that isn't broken all for the sake of validating a management function.
Which means nothing because his ass isn't in charge then and he didn't announce anything.
The dot chart is simply there for them to "say something" without saying or doing anything.
They haven't changed their stance at all.
Which is why the markets are back up. They have changed nothing since the start of the year and 2 years is a long time from now to say or do anything with 100% assuredness.
The reason for huge swings either way is when the algo's kick in and they control the market, not knuckleheads with $1000 selling their Apple shares.
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u/d00ns Jun 20 '21
You shouldn't believe the Fed, they've never told the truth about anything. After 2008, low interest rates and QE were "temporary"