Well, I think the Dems will want a short recession right around the end of 2020 to help them take back the White House.
Then they will tell the Fed to stimulate again please and 'artificially' prop up the economy again.
I'm curious how the Fed can artificially prop up anything.. If they could, we'd have avoided the 2008 recession.
Their 'All in' policy did not begin until the 2008 Recession when Ben Bernanke was Fed Chairperson. Before that it was Alan Greenspan (who was not in favor of the massive meddling of the Fed post 2007/8).
Plus, the Fed minutes from back then prove how it completely undeerestimated the housing crisis until it was 'too late'.
Fed Misread Crisis in 2008, Records Show
And what can the Fed do? What can't it do?
- The Fed can buy almost any publicly traded company it wants (it bought the then largest insurance company in the world - AIG - back in 2008...just to keep it afloat).
https://seekingalpha.com/article/95810-federal-reserve-buys-aig
This means any corporation that gets into trouble that the Fed feels is 'Too Big To Fail'...it can simply buy it (if it can get hold of enough shares) and dump money into it to keep it going. ANY corporation...and as many as it wishes.
- It can drop rates to zero (and even to below zero) to encourage people to take out more and more loans to stimulate the economy and especially the stock market.
- It can buy up trillions of dollars in toxic assets from banks as it did in 2008 to the tune of $1.7 trillion dollars.
- It can do ALL kinds of things to deliberately send equity markets skyrocketing. It already did over a trillion of QE-type stimuli that has directly seen the stock markets rise up since April 2009.
And that just scratches the surface. They could do what Japan's central bank has been doing for years and buy stocks directly through ETF's. Or just buy stocks directly...as much as they want to. Hundreds of billions, trillions, tens of trillions if they felt like it.
- And since the Fed has that crazy 'full employment' mandate....this means it can do almost anything it wants to almost any part of the economy that it can purchase/effect.
- It can allow the government to run trillion+ dollar deficits by buying the government bonds (if no one else will).
It's tough for an economy to enter a recession when the central bank is willing to keep rates at/below zero and/or prepared to dump literally trillions into the economy per year to keep it afloat.
And as we saw late last year, the Fed can cause people to panic just by hinting at interest rate hikes. And cause them to rejoice with the promise not to hike rates.
IMO, the number one driving force in the US economy since 2008 (by far) has been the Federal Reserve.
