{"id":48800,"date":"2019-10-03T14:56:27","date_gmt":"2019-10-03T19:56:27","guid":{"rendered":"https:\/\/olduvai.ca\/?p=48800"},"modified":"2019-10-03T14:56:35","modified_gmt":"2019-10-03T19:56:35","slug":"the-feds-insurance-rate-cuts-didnt-work-now-for-the-emergency-cuts","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=48800","title":{"rendered":"The Fed\u2019s \u201cInsurance\u201d Rate Cuts Didn\u2019t Work. Now For The Emergency Cuts"},"content":{"rendered":"\n

The Fed\u2019s \u201cInsurance\u201d Rate Cuts Didn\u2019t Work. Now For The Emergency Cuts<\/a><\/h3>\n\n\n\n

Pity the guys now running the Fed. They\u2019ve inherited an economy that requires ever-bigger infusions of new credit and ever-lower interest rates to avoid financial cardiac arrest. But with interest rates already perilously close to zero the usual leeway is no longer there.<\/p>\n\n\n\n

Making the best of a bad hand, Fed chair Jerome Powell has been cutting the Fed Funds rate but managing expectations for future cuts by calling the current ones \u201crecalibration\u201d and \u201cinsurance.\u201d In other words, \u201cdon\u2019t expect a quick excursion into steeply-negative territory. In fact this latest cut might be all there is.\u201d<\/p>\n\n\n\n

But the economy, like any addict, is profoundly uncomfortable with not knowing where the next fix is coming from and is behaving accordingly. From just the past couple of days\u2019 headlines:<\/p>\n\n\n\n

US manufacturing survey contracts to worst level in a decade <\/a><\/strong>US gross national debt jumps by $1.2 trillion, to $22.7 trillion <\/a>Growth hits the wall <\/a>Student loan debt soars, totaling $1.6 trillion in 2019 <\/a>There is good reason to fear the repo <\/a>Midwest\u2019s faltering economies will spread pain nationwide <\/a>Treasury yields sink after U.S. manufacturing weakness raises recession fears <\/a><\/strong><\/p>\n\n\n\n

VC veterans host emergency meeting of unicorns as IPO \u2018bubble\u2019 implodes <\/a><\/strong><\/p>\n\n\n\n

Now equities are picking up the anxious vibe. See Global stocks plunge for a second day to start Q4.<\/a>
<\/strong><\/p>\n\n\n\n

What happens next? Almost certainly, a \u201ccoordinated\u201d round of aggressive easing by the US Fed, the ECB<\/a> and BoJ. With some unconventional coercion thrown in by the People\u2019s Bank of China. <\/p>\n\n\n\n

As for the timing, it\u2019s just a question of \u201cthe number.\u201d That is, how far does the S&P 500 have to fall before the stampede begins. Since this question will be answered by a bunch of largely clueless men dripping fear sweat and trying to figure out why their models have stopped working (and more poignantly why their life\u2019s work has turned out to be a fraud), the number is unknowable in advance. <\/p>\n\n\n\n

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

The Fed\u2019s \u201cInsurance\u201d Rate Cuts Didn\u2019t Work. Now For The Emergency Cuts Pity the guys now running the Fed. They\u2019ve inherited an economy that requires ever-bigger infusions of new credit and ever-lower interest rates to avoid financial cardiac arrest. But with interest rates already perilously close to zero the usual leeway is no longer there. […]<\/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":[14803,391,7544,3650],"class_list":["post-48800","post","type-post","status-publish","format-standard","hentry","category-economics","tag-dollar-collapse-com","tag-growth","tag-john-rubino","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48800","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=48800"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48800\/revisions"}],"predecessor-version":[{"id":48801,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48800\/revisions\/48801"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48800"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48800"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48800"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}