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Powell’s Verschlimmbessern Fed

Powell’s Verschlimmbessern Fed

According to wiki, verschlimmbessern is to make something worse in an honest but failed attempt to make it better

Other working titles for today’s T-Report included

  • So Much Communication, So Little Information
  • The Over-Engineered and Micro-Managed Market
  • The Catch-22 of Fed Policy
  • Why do Today what you Can do Next Meeting?
  • I’ll Gladly Cut Next Meeting for a Market Move Today

The titles all convey the same sentiment – that the Fed has gone overboard in terms of trying to manage expectations and is distorting markets and creating confusion.

If You Are Going to Buy Insurance, Why Not Buy it Now?

If the Fed’s rate cut is supposed to be an “insurance cut”, why not do that back in June? 

What was the thought process?  Yeah, I live in a flood plain, yeah, it’s the rainy season, yeah, the river is running high, but I was kind of hoping to lie on the couch and watch the game.  Maybe I’ll buy that flood insurance next month?

If we ‘needed’ an insurance cut, why didn’t we get it?  Because it wasn’t needed?  But if it wasn’t needed in June, why after some good data, is it needed in July? 

After a Decade of Failing on Inflation, Let’s Wait 1 Month and then Panic

Let’s ignore for a moment that many people question how relevant the common inflation measures are to today’s economy.

Let’s ignore for a moment the fact that the Fed’s favorite measure of inflation barely beats the alleged 2% target.  The PCE didn’t even average 2% during the 8 years before the financial crisis, let after the financial crisis.

Let’s ignore for a moment how we came up with 2% as being some optimal level of inflation.

Let’s ignore for a moment the chart Academy sent around yesterday, highlighting that for all the academic/wonkish discussions on inflation expectations, they are pretty much just correlated to the price of oil.

…click on the above link to read the rest of the article…

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