{"id":16592,"date":"2016-01-17T11:42:55","date_gmt":"2016-01-17T16:42:55","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16592"},"modified":"2016-01-17T11:59:30","modified_gmt":"2016-01-17T16:59:30","slug":"the-feds-stunning-admission-of-what-happens-next","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16592","title":{"rendered":"The Fed’s Stunning Admission Of What Happens Next"},"content":{"rendered":"

The Fed’s Stunning Admission Of What Happens Next<\/a><\/h3>\n
Following an epic global stock rout, one which has wiped out trillions in market capitalization, it has rapidly become a consensus view (even by staunch Fed supporters such as the\u00a0Nikkei Times<\/a>) that the Fed committed a gross policy mistake by hiking rates on December 16, so much so that this week none other than former Fed president Kocherlakota\u00a0openly mocked the Fed’s credibility\u00a0<\/a>when he pointed out the near\u00a0record plunge in forward breakevens<\/a>\u00a0suggesting the market has called the Fed’s bluff on rising inflation.<\/div>\n
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All of this happened\u00a0before JPM cut its Q4 GDP estimate\u00a0<\/a>from 1.0% to 0.1% in the quarter in which Yellen hiked.<\/p>\n

To be sure, the dramatic reaction and outcome following the Fed’s “error” rate hike was predicted on this website on many occasions, most recently two weeks prior to the rate hike in “This Is What Happened The Last Time The Fed Hiked While The U.S. Was In Recession<\/a>” when we demonstrated what would happen once the Fed unleashed the “Ghost of 1937<\/a>.”<\/p>\n

As we pointed out in early December, conveniently we have a great historical primer of what happened the last time the Fed hiked at a time when it misread the US economy, which was also at or below stall speed, and the Fed incorrectly assumed it was growing.<\/p>\n

We are talking of course, about the infamous RRR-hike of 1936-1937, which took place smack in the middle of the Great Recession.<\/p>\n

\"\"<\/a><\/p>\n

Here is what happened then, as we described previously in June.<\/p>\n

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[No episode is more comparable to what is about to happen] than what happened in the US in 1937, smack in the middle of the Great Depression.<\/div>\n<\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Fed’s Stunning Admission Of What Happens Next Following an epic global stock rout, one which has wiped out trillions in market capitalization, it has rapidly become a consensus view (even by staunch Fed supporters such as the\u00a0Nikkei Times) that the Fed committed a gross policy mistake by hiking rates on December 16, so much […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[3038,1764,1870,1719,10905,305,333,383,534,954,572,662,1264,670,775,4318],"class_list":["post-16592","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-america","tag-bank-of-international-settlements","tag-bill-gross","tag-bond","tag-bridgewater","tag-federal-reserve","tag-france","tag-great-depression","tag-monetary-policy","tag-money-supply","tag-nikkei","tag-quantitative-easing","tag-recession","tag-recovery","tag-switzerland","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16592","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16592"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16592\/revisions"}],"predecessor-version":[{"id":16594,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16592\/revisions\/16594"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}