Powell: “ we are not cutting rates this year”
Markets” oh yes you are “
The real enemy has yet to reveal himself. The recent bank failures indicate it’s not inflation that is the big shark. It’s a deflationary bust that lurks. For the first time in 40 years the Fed raised rates above the peak of the previous cycle. All while money supply (M2) is dropping. Not since the Great Depression has this happened. History is clear, not a question of IF but more like WHEN a bust will happen. an inflationary debt based system like we have, encourages growth thru low rates and an expanding money supply. Now we have an economy being starved by increasing rates and a falling money supply. Dangerous. The low rates and extreme money printing during COVID has created an economy built on a poor foundation.
Im an amateur economist, but even an amateur can see this. Differing ( or any) opinions welcome.
Yes, you hit on something that’s important the money supply figures. No question the Fed has continued to restrain monetary growth in a effort to tame inflation. Like you said rising rates and shrinking the money supply can be dangerous.
Another concern is the LEI has dropped for the tenth straight month although there has been some improvement. The negative level of the LEI is a risk for the economy.
It’s nuts that the 3 month T bill rate and Fed Funds rate are higher than the 10 yr Treasury note. This inversion has gone on for sometime.