Crudele/New York Post

“Read between the lines and the Federal Reserve is admitting that it is lost. ‘Puzzled’ might be a better word. And while the stock market loves that idea because it means there probably won’t be as many interest rate hikes as expected this year, this situation isn’t good for America. Interest rates were left where they are at this meeting and the Fed looks more reluctant to raise them in the months ahead….Why isn’t the Fed pushing rates higher? Because there are ‘crosscurrents,’ says Fed chief Jerome Powell… the most significant of those crosscurrents, namely the fact that the stock market throws a tantrum when the Fed raises interest rates and so, too, does President Trump. It would be messy for the Fed president to admit that he’s watching Wall Street or listening to the president….There’s one other problem that the Fed has – and it’s a very big one. Back in 2009, the Fed started printing fake money so that it could buy government bonds and keep interest rates extraordinarily and artificially low. The government had purchased around $4 trillion in government bonds, bank debt and Treasury securities from 2009 to 2011. The Fed never had a plan to get out of this fake-money situation. It never knew how to ‘quantitative tighten,’ that is, sell all those trillions in securities without affecting the markets and the economy. The Fed has started selling off those excess assets, something that the financial markets didn’t seem to like….The Fed is like someone driving a car with a navigation system that keeps rerouting. It really doesn’t know if it is going in the right direction. It is lost.”

 

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