Winston
Platinum Member
Wouldn't have came back to this stale thread but ran across a good read that explains my position. But first, you have not posted "balance sheets", you have posted factors affecting reserve balances. So, a higher number is a better number. I mean look at MBS. Climbed from January to March, almost the same from March to the current balance sheet. Precisely matching the cutoff of QE that I stated was March.
There is much there to digest. The ignoring of the Philip's curve, being reactive instead of proactive, failing to anticipate a sluggish labor market, and yes, all that stimulus spending during Trump's tenure. But let me give you some of the biggest takeaways,
“The Fed should be looking ahead, not looking around,” Nelson wrote in a summer email to colleagues.“
That is the reactive verses proactive I mentioned. Any actions the Fed takes have a lag effect. For me, the best example is chasing down singles after a covey of quail are broken up. What the Fed does, is they shoot at the quail where it is at. They don't lead it. They are going to miss every time. Leading is the traditional means of knocking down those quail, but I don't do that either. I "track" them. I put the sites on them and follow their movements, pull the trigger and keep tracking. It got to the point, that after I was older than 16 the other hunters just sat down and took a break and let me bring home the singles.
The rapid economic recovery from the COVID-19 lockdowns led to a burst in demand, fueled by government stimulus payments to consumers and businesses, but also complicated by supply-chain disruptions related to the pandemic. The war in Ukraine was another major factor which pushed up oil prices and “you can’t blame the Fed for not foreseeing that,” Gertler said. Meanwhile, the slow return to work, retirements, and resignations from unpleasant work during the pandemic meant labor-market shortages pushed up wages.
The article author is being too generous here. Outside of the war in Ukraine, all of those things were entirely predictable. But do you see "Biden" anywhere in that assessment? I knew the burst in demand was coming, I mean if you are on the ground, actively engaged in the economy, and not some banker sitting on your ass "reacting", you would easily, not only know it, but feel it. Supply chain issues, I fight them each and every day. I have to constantly make adjustments to product mix, shelf space allocation. I have to "control demand", for a multi-million dollar operation. I didn't apply to this job, a long time family friend came and asked me for a favor. I still have my own book of business, running pretty much on autopilot. Has been, for more than a decade. But like I said, you can't gauge where the economy is going from your vaulted position in the castle's tower. You got to be there, amongst the masses. Perhaps our biggest problem is that our elected representatives have no clue as to what is going on with "the masses". Nor does the Fed. Until we rectify that situation we will consistently move from crisis to crisis.
