{"id":38051,"date":"2018-09-20T19:26:46","date_gmt":"2018-09-21T00:26:46","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38051"},"modified":"2018-09-20T19:26:46","modified_gmt":"2018-09-21T00:26:46","slug":"by-the-time-the-fed-hits-its-goals-the-markets-will-be-crashing","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38051","title":{"rendered":"By the Time the Fed Hits Its Goals, the Markets Will Be Crashing"},"content":{"rendered":"
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By the Time the Fed Hits Its Goals, the Markets Will Be Crashing<\/a><\/h3>\n<\/header>\n
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The Powell Fed has set one goal and one goal only for its policy\u2026<\/p>\n

Hitting the \u201cneutral rate of interest.\u201d<\/p>\n

The neutral rate of interest is when the Fed has rates equal to the pace of inflation. While this is\u00a0technically<\/em>what the Fed is\u00a0SUPPOSED <\/em>to be doing, NO Fed (or any other Central Bank for that matter)\u00a0has done it in over 30 years<\/u><\/strong>: the Greenspan, Bernanke, and Yellen Feds were all notorious for running \u201caccommodative\u201d policy in which rates were kept well BELOW the rate of inflation.<\/p>\n

Indeed, if you had to summate Fed policy from 1987 to 2018, the best word would be \u201caccommodative.\u201d It is not coincidental that this time period coincided with serial bubbles in the financial markets. This was done\u00a0intentionally\u00a0<\/em>by Alan Greenspan, Ben Bernanke, and Janet Yellen.<\/p>\n

Not Jerome Powell.\u00a0\u00a0During his July Q&A session with Congress in July, Fed Chair Powell emphasized that the most important focus for the Fed under his leadership would be \u201ca neutral rate of interest.\u201d<\/p>\n

In answering a question [concerning the yield curve flattening] from Senator Pat\u00a0Toomey\u00a0of Pennsylvania, Powell said that, in his view, \u201cWhat really matters is what the neutral rate of interest is.\u201d And perhaps longer-term Treasury yields send a message about that rate.
\n<\/u><\/strong><\/em><\/p>\n

Source: Bloomberg<\/p><\/blockquote>\n

I initially thought this was Powell playing to Congress (for 30+ years Fed Chairs have simply told Congress what it wanted to hear during their testimony). However, since that time, the\u00a0Powell Fed has made it 100% clear that it did in fact WANT neutral rates.<\/u><\/strong><\/p>\n

Last month, Dallas Fed President Robert Kaplan outlined this in no uncertain terms.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By the Time the Fed Hits Its Goals, the Markets Will Be Crashing The Powell Fed has set one goal and one goal only for its policy\u2026 Hitting the \u201cneutral rate of interest.\u201d The neutral rate of interest is when the Fed has rates equal to the pace of inflation. While this is\u00a0technicallywhat the Fed […]<\/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":[181,303,21771,431,16888,501,10709,21770,3650],"class_list":["post-38051","post","type-post","status-publish","format-standard","hentry","category-economics","tag-crisis","tag-fed","tag-gains-pains-and-capital","tag-interest-rates","tag-jerome-powell","tag-market-crash","tag-policy-error","tag-the-phoenix","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38051","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=38051"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38051\/revisions"}],"predecessor-version":[{"id":38052,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38051\/revisions\/38052"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}