- Jun 6, 2007
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Media reports are that the Federal Reserve Board will not raise the Federal Funds Rate at the next meeting on October 31/November1. This is a colossal mistake; inflation is a devastating cancer to a country's economy and America's inflation problem is not under control it is not on a certain trajectory to two percent long-term. The Federal Reserve has done great work over the last eighteen months or so bringing down the inflation rate but it is not tamed it could readily begin to rise again. Last month the inflation rate was 3.7 percent and for August it was also 3.7 percent, far from the needed 2.0 percent target. The 2nd quarter GDP growth was 2.1 % and the 1st quarter was 2.2 % and the estimate for the third quarter is 1.9 percent indicating a strong economy owing to the infrastructure and green energy bills passed in Washington over the last three years, on the employment front the economy created 336K jobs in September and 227K in August meaning America's jobs picture is higher than just stagnant employment indicating workers still have a decent hand in getting a high wage and the American consumer will have money to spend all putting upward pressure on prices. Plus, once inflation gets bad it has a self-propelling cyclical effect which America is seeing where high inflation causes workers to ask for higher wages which causes employers to raise prices.
The Feds got to raise the Fed Funds rate a quarter point at the next meeting and the one in mid-December and they got to announce to the public they aren't lowering it for all of 2024 barring a major recession. The medicine so far given to the inflation problem cancer hasn't given great confidence that the cancer will be completely destroyed, a stronger treatment program than heretofore utilized is needed, it is obvious! Chairman Jay Powell has got to realize that the nation's political leadership is too political they don't have the character to endure a really long stretch of high interest rates to stop unduly high inflation rate from being ingrained in the economy and causing terrible harm. This political leadership cannot be trusted to endure another round of interest rate increases in 2025 if it turns out inflation is not under control at that time. President Donald Trump if he follows his track record will deem such an effort by the Fed in 2025 as grounds for removing the sitting Fed. Chairman and a President Biden will be lobbied like crazy from his caucus in Congress to bring about a change!
The Feds got to raise the Fed Funds rate a quarter point at the next meeting and the one in mid-December and they got to announce to the public they aren't lowering it for all of 2024 barring a major recession. The medicine so far given to the inflation problem cancer hasn't given great confidence that the cancer will be completely destroyed, a stronger treatment program than heretofore utilized is needed, it is obvious! Chairman Jay Powell has got to realize that the nation's political leadership is too political they don't have the character to endure a really long stretch of high interest rates to stop unduly high inflation rate from being ingrained in the economy and causing terrible harm. This political leadership cannot be trusted to endure another round of interest rate increases in 2025 if it turns out inflation is not under control at that time. President Donald Trump if he follows his track record will deem such an effort by the Fed in 2025 as grounds for removing the sitting Fed. Chairman and a President Biden will be lobbied like crazy from his caucus in Congress to bring about a change!
