{"id":60793,"date":"2021-12-05T14:07:33","date_gmt":"2021-12-05T19:07:33","guid":{"rendered":"https:\/\/olduvai.ca\/?p=60793"},"modified":"2021-12-05T14:07:33","modified_gmt":"2021-12-05T19:07:33","slug":"the-fed-will-break-the-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=60793","title":{"rendered":"The Fed Will Break the Economy"},"content":{"rendered":"<header class=\"ArticleFull_header__11o5_\">\n<h3><a href=\"https:\/\/www.theepochtimes.com\/the-fed-will-break-the-economy_4137332.html?utm_source=partner&amp;utm_campaign=ZeroHedge\">The Fed Will Break the Economy<\/a><\/h3>\n<\/header>\n<div class=\"NodeContent_mainContent__38L44\">\n<div class=\"NodeContent_body__2clki NodeBody_container__1M6aJ\">\n<p>Last week, the Fed was handed an unexpected gift as first-time jobless claims fell to the lowest level since 1969, which gives the\u00a0<a href=\"https:\/\/www.theepochtimes.com\/t-federal-reserve\">Federal Reserve<\/a>\u00a0the\u00a0<strong>green light to continue tapering its $120 billion monthly purchases of U.S. Treasury and mortgage-backed securities<\/strong>. Given the Fed\u2019s dual mandate of maximum employment and stable prices, low unemployment claims along with a low unemployment rate allow the Fed to focus on combating\u00a0<a href=\"https:\/\/www.theepochtimes.com\/t-inflation\">inflation<\/a>.<\/p>\n<p><a href=\"https:\/\/www.zerohedge.com\/s3\/files\/inline-images\/2020-12-29T111145Z-web-700x420.jpg?itok=Yq1lkljK\" data-image-external-href=\"\" data-image-href=\"\/s3\/files\/inline-images\/2020-12-29T111145Z-web-700x420.jpg?itok=Yq1lkljK\" data-link-option=\"0\"><picture><img loading=\"lazy\" decoding=\"async\" class=\"inline-images image-style-inline-images\" src=\"https:\/\/assets.zerohedge.com\/s3fs-public\/styles\/inline_image_mobile\/public\/inline-images\/2020-12-29T111145Z-web-700x420.jpg?itok=Yq1lkljK\" alt=\"\" width=\"500\" height=\"300\" data-entity-type=\"file\" data-entity-uuid=\"a1d3bd6e-9235-4406-8e72-7dff123e150b\" data-responsive-image-style=\"inline_images\" \/><\/picture><\/a><\/p>\n<div class=\"Advert_desktop__1J5vD Advert_tablet__3QEBr Advert_mobile__1rlLc Advert_placement__1I4yb Advert_align__N0_fw\">\n<aside id=\"in-content-video\" class=\"Advert_verticallySpaced__wnPy3\" data-google-query-id=\"CNatttmszfQCFWqDywEdkG4Hlg\">\n<div class=\"ac-widget-placeholder ac-reset\" data-loaded-pid=\"zerohedgecom\" data-loaded-wid=\"0011r00002RYAhn_1419\">\n<div id=\"ac-lre-player-ph-ext-y8mS3P6fkYHmPVTyt5GtmcMNVvSkWZUD\" class=\"ac-lre-player-ph-ext ac-lre-ph-playlist-hide-scroll-bar ac-lre-carousel-horizontal ac-lre-carousel-legacy\">\n<div id=\"ac-lre-player-ph-y8mS3P6fkYHmPVTyt5GtmcMNVvSkWZUD\" class=\"ac-lre-player-ph ac-lre-desktop\">\n<div class=\"ac-lre-wrapper luminous-theme is-floated-outer-title\">\n<div class=\"ac-lre-playlist-horizontal\">\n<div id=\"ac-lre-ph-playlist-horizontal\" class=\"ac-lre-playlist-text\">\n<div class=\"ac-lre-playlist-rail\">\n<div class=\"ac-lre-playlist-slide\" data-index=\"2\" data-mediaid=\"ifmeks3lof4e2nrngvdgowthjfgeqqjt\" data-is-click=\"true\" data-title=\"China\u2019s Companies Have Worst Quarter on Record, Beige Book Says\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/aside>\n<\/div>\n<p><strong>To fight inflation, the Fed only has two policy tools.\u00a0<\/strong>The Fed can raise the federal funds rate, which is currently at 0 percent, and it can taper or reduce the size of its balance sheet. While those two tools are good at fighting monetary inflation, or rising prices associated with money printing, neither are useful for fighting supply-chain inflation.<\/p>\n<p>The Fed isn\u2019t concerned about how inflation manifests itself but only its ability to fight inflation. At the Federal Open Market Committee\u2019s Nov. 3 press conference, Fed Chair Jerome Powell announced the committee has decided it was appropriate to reduce its asset purchases.<\/p>\n<p>Starting in mid-November, the Fed would reduce its purchases of U.S. Treasury and mortgage-backed securities from $120 billion per month to $105 billion per month. In mid-December, the Fed will further reduce its asset purchases to $90 billion per month. Many pundits believe the Fed will increase the pace of its reductions at its Dec. 15 press conference, which will mark the last Federal Open Market Committee meeting for 2021.<\/p>\n<p><strong>For the Fed, the need to slow the rate of inflation is a matter of maintaining credibility.\u00a0<\/strong>Congress has assigned the role of maintaining stable prices to the Fed, which has determined that 2 percent annualized inflation is a reasonable target. With the Consumer Price Index rising at a rate of\u00a0<a href=\"https:\/\/www.bls.gov\/opub\/ted\/2021\/consumer-prices-increase-6-2-percent-for-the-year-ended-october-2021.htm\">6.2 percent<\/a>\u00a0on a seasonally adjusted rate in October, there are serious political ramifications for Congress should the Fed be unable to control inflation.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Fed Will Break the Economy Last week, the Fed was handed an unexpected gift as first-time jobless claims fell to the lowest level since 1969, which gives the\u00a0Federal Reserve\u00a0the\u00a0green light to continue tapering its $120 billion monthly purchases of U.S. Treasury and mortgage-backed securities. Given the Fed\u2019s dual mandate of maximum employment and stable [&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":[7557,15374,303,538,13351,32257,16350,3650],"class_list":["post-60793","post","type-post","status-publish","format-standard","hentry","category-economics","tag-asset-purchases","tag-consumer-price-inflation","tag-fed","tag-money-printing","tag-price-inflation","tag-steven-van-metre","tag-the-epoch-times","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/60793","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=60793"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/60793\/revisions"}],"predecessor-version":[{"id":60794,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/60793\/revisions\/60794"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=60793"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=60793"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=60793"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}