Usually, we start with a review of the quarter, but I found Mr. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives.
Well, to be honest, he has confused the heck out of me and I have been at this for a while. Why you may ask? Bernanke really is at the reins of the Fed and other Fed Governors are mostly mouthpieces for him and everyone else listens and positions themselves at least on a short-term basis based on what he says.
We have been writing for nearly 10 years that it is an economy built on leverage and one that the cost of money may have a greater impact on than any other economy in history. Although the moderation in the growth of aggregate demand should help to limit inflation pressures over time, the Committee judges that some inflation risks remain.
According to Bloomberg LP, Treasury securities suffered their worst first-half drubbing of the past seven years which makes us especially proud of our across-the-board gains in bonds during the quarter in particular with less risk taken.
The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
The larger the balance sheet, the more new money it takes to keep the economic ball rolling. And economies, since the beginning, have been based on leverage, but this is not a normal economy. Readings on core inflation have been elevated in recent months. Where are we now in the economic cycle and what is the Fed doing?
And what has he said since being in office? In a normal economy, the cost of money, set by the FOMC or Federal Open Market Committee in short-term rates, and other parts of the yield curve by market participants, determine what everyone pays for loans.
My answer was that what happened was a market phenomenon, not an economic phenomenon. Ongoing productivity gains have held down the rise in unit labor costs, and inflation expectations remain contained.
However, the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. He has gone from hawkish tough on inflation to dovish easy on inflation at least 4 times since being sworn into office in February Each time he flip flopped the markets moved violently, which makes it a bit tough to anticipate the smaller moves.
So, what did they say?
By my reckoning, it started in and continues still to increase in size. How can I tell? Recent indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.
In other words, yields spiked as the Fed continued their vigilant fight against inflation that they began in mid I will not bore you with the charts and graphs that I have been using over the years in my writings, but suffice to say, sports-fans, there IS a debt bubble in this country.
The Fed finds themselves in a quandary, it seems.
Why is the quote, while short, so important? In my humble opinion, it is to support the bloated asset side of the balance sheet, an asset side that has gone from bubble to bubble to bubble-bubbles in stocks, real estate and now commodities. Lately, it has experienced periods of growth well into double digits per year.
Here is the release: In the old days, people would be uttering the ugly word - stagflation, when prices rise as the economy slows. By that I mean that many short-term bets had been made against the market leading up to the release and those bets were simply reversed, resulting in a short squeeze.
When did it start? Most people asked me if I thought if that made sense. You may or may not have noticed the large rally on Wall Street in stocks right at the end of the quarter.My brother has often said to me, “do what you are passionate about, and the money will come eventually”.
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