The Lazarus Fed: Immaculate Misconception?
Following up on Jamie's Cryin Wolf? There are a lot of misconceptions out there. Re: today's FOMC announcement...
Misconception: Interest rates are the price of money.
Truth: Interest rates are the cost of loan funds, not the price of money which is reflected in FX rates and pairs. The purchasing power of a currency is the reciprocal of the price level. Otherwise stated, the value of "money" varies inversely with the price level.
Misconception: The "money" stock, its flow, velocity, credit availability and an entire economy can be managed by targeting the cost of loan funds i.e. interest rate cuts are insurance?
Truth: Cuts are ex post warnings i.e. no matter how much or for how long the FOMC cuts, this will not help the underlying pernicious conditions. For the low interest rate addicts that are ADD afflicted, step into the hole again? We've been there already, it didn't work.
Speaking of pernicious conditions and illusory misconception: The condition of our condition is economically robust.
Remedy for the original condition (dot.com and GFC): going to zero bound ZIRP and NIRP is like putting phisohex and a splint on a compound fractured leg and hoping for the best? Gangrene, eventual amputation and a zombie economy come to mind, but I digress.
IMHO the FED will not cut, as this would signal a policy failure and falsity in their punch drunk econometrics which have been utilized in achieving their primary charter "anchor public expectations" i.e. What recovery?
Oh yes, that "advertised" one since the GFC with negative real wage inflation (proof the unemployment numbers are cooked) and "advertised tame" under 2% CPI, PCE inflation (not healthy). Keep calm and carry on, mighty Ro-BUST, sure thing there, right, got it, thanks.
One cannot navigate on false premise, errors of judgement come back to disingenuous narrative anchored in false telemetry i.e. econometric falsity, based in economic false doctrine, remember GIGO applies. Speaking of garbage in, garbage out...
Reliant upon the opines and beliefs of "credentialed" individuals who know not a debit from credit, money from mud, nor of what they speak, the financial MSM "parrot food" doesn't help matters either. Back to the future...
As return on inside money is less than outside money, which is contractionary, and with the confirmation of multiple curve inversions (bond, Eurodollar, swap spreads, et al) perhaps the FOMC will cut IOER and/or raise RRP? TBD.
As to Lazarus arising one can only keep chanting those incantations?
Hope in one hand and well, you know the rest... More to come in Q219 GDP: Puree Mode? Stay tuned, no flippin.
Misconception: Interest rates are the price of money.
Truth: Interest rates are the cost of loan funds, not the price of money which is reflected in FX rates and pairs. The purchasing power of a currency is the reciprocal of the price level. Otherwise stated, the value of "money" varies inversely with the price level.
Misconception: The "money" stock, its flow, velocity, credit availability and an entire economy can be managed by targeting the cost of loan funds i.e. interest rate cuts are insurance?
Truth: Cuts are ex post warnings i.e. no matter how much or for how long the FOMC cuts, this will not help the underlying pernicious conditions. For the low interest rate addicts that are ADD afflicted, step into the hole again? We've been there already, it didn't work.
Speaking of pernicious conditions and illusory misconception: The condition of our condition is economically robust.
Remedy for the original condition (dot.com and GFC): going to zero bound ZIRP and NIRP is like putting phisohex and a splint on a compound fractured leg and hoping for the best? Gangrene, eventual amputation and a zombie economy come to mind, but I digress.
IMHO the FED will not cut, as this would signal a policy failure and falsity in their punch drunk econometrics which have been utilized in achieving their primary charter "anchor public expectations" i.e. What recovery?
Oh yes, that "advertised" one since the GFC with negative real wage inflation (proof the unemployment numbers are cooked) and "advertised tame" under 2% CPI, PCE inflation (not healthy). Keep calm and carry on, mighty Ro-BUST, sure thing there, right, got it, thanks.
One cannot navigate on false premise, errors of judgement come back to disingenuous narrative anchored in false telemetry i.e. econometric falsity, based in economic false doctrine, remember GIGO applies. Speaking of garbage in, garbage out...
Reliant upon the opines and beliefs of "credentialed" individuals who know not a debit from credit, money from mud, nor of what they speak, the financial MSM "parrot food" doesn't help matters either. Back to the future...
As return on inside money is less than outside money, which is contractionary, and with the confirmation of multiple curve inversions (bond, Eurodollar, swap spreads, et al) perhaps the FOMC will cut IOER and/or raise RRP? TBD.
As to Lazarus arising one can only keep chanting those incantations?
Hope in one hand and well, you know the rest... More to come in Q219 GDP: Puree Mode? Stay tuned, no flippin.
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