{"id":47682,"date":"2019-08-07T06:28:04","date_gmt":"2019-08-07T11:28:04","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47682"},"modified":"2019-08-07T06:29:52","modified_gmt":"2019-08-07T11:29:52","slug":"can-the-fed-really-control-the-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47682","title":{"rendered":"Can the Fed really Control the Economy?"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.armstrongeconomics.com\/world-news\/central-banks\/can-the-fed-really-control-the-economy\/\">Can the Fed really Control the Economy?\u00a0<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>QUESTION:<\/strong>&nbsp;This whirligig talk of whether the Fed cuts rates by 25 or 50 basis points is carnival-level absurdity. Does the Fed have the \u201cpretense of knowledge,\u201d as F.A. Hayek, said, that they can regulate the economy like turning up or down the thermostat? I know you don\u2019t agree with this, Martin, but then, Wall St. trades on daily sentiment not ideology.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">TM<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>ANSWER:<\/strong>&nbsp;I understand the theory, but where it is seriously flawed is the idea that people will borrow simply because you lower rates. More than 10 years of Quantitative Easing, which has failed, answers that question. The way the Fed was originally designed allowed it to stimulate the economy by purchasing corporate paper directly, which placed it in a better management position. Buying only government paper from banks who in turn hoard the money fails. As Larry Summers admitted, they have<strong>&nbsp;NEVER<\/strong>&nbsp;been able to predict a recession even once.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><a href=\"https:\/\/d33wjekvz3zs1a.cloudfront.net\/wp-content\/uploads\/2017\/03\/DowIntRates-1929.jpg\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" src=\"https:\/\/d33wjekvz3zs1a.cloudfront.net\/wp-content\/uploads\/2017\/03\/DowIntRates-1929-202x300.jpg\" alt=\"\" class=\"wp-image-62393\"\/><\/a><\/figure><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">The Fed lowered rates during every recession to no avail just as the ECB has moved to negative rates without success. The central banks are trapped and they are quietly asking for help from the politicians which will never happen.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Can the Fed really Control the Economy?\u00a0 QUESTION:&nbsp;This whirligig talk of whether the Fed cuts rates by 25 or 50 basis points is carnival-level absurdity. Does the Fed have the \u201cpretense of knowledge,\u201d as F.A. Hayek, said, that they can regulate the economy like turning up or down the thermostat? I know you don\u2019t agree [&hellip;]<\/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":[5496,282,26482,5479,534,661,3650],"class_list":["post-47682","post","type-post","status-publish","format-standard","hentry","category-economics","tag-armstrong-economics","tag-european-central-bank","tag-fa-hayek","tag-martin-armstrong","tag-monetary-policy","tag-qe","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47682","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=47682"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47682\/revisions"}],"predecessor-version":[{"id":47683,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47682\/revisions\/47683"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}