4 replies to this topic

[pdx5]

The Federal Reserve on Wednesday announced plans to accelerate the wind down of pandemic-era stimulus for the U.S. economy and penciled in at least three interest rate hikes next year as policymakers seek to combat the hottest inflation in four decades.

The Federal Open Market Committee said at the conclusion of its two-day policy-setting meeting this week that it would double the reduction of its asset-purchase program to $30 billion a month, a timeline that could phase out the purchases entirely by March rather than the original June trajectory laid out last month.

Although policymakers voted to hold rates near zero, where they have sat since March 2020, new economic projections show that every Fed official has penciled in at least one rate hike next year – a considerable shift from September, when half of the central bankers believed interest rate increases were not warranted until at least 2023.

My comment...FED is behind the curve as usual. 

[redfoliage2]

I see the Fed is confident that Omicron wont stop the economic recovery next year.. I tend to agree

[q4wer]

I don't think that market has priced in this news yet

[Douglas]

At yesterday's FED meeting, the FED funds rate was set at roughly a real -10% based on a non-baloney inflation rate from shadowstats.com.  With deeply sub-zero interest rates the FED is pumping like crazy.  With similar inflation rates, Paul Volker's FED set the FED funds rate at a real +10%.  Make no mistake about it, this FED is pumping as hard as it can get away with and is driving inflation higher.  As I see it there are only three possible explanations:  the FED wants higher inflation, the FED doesn't want higher inflation but sees no alternative, or they are complete idiots.  I think there are reasonable arguments for all three answers, but it is what it is, regardless of why.  They are printing like mad and plan to continue to print like mad into the foreseeable future. Your or my opinion as to whether what they are doing is right, wrong, reasonable or irrational just doesn't matter.  It is a hard fact, and we have to invest based on the facts, not what we want them to be.  So bulls and asset holders, the FED has your back, and bears, savers and pensioners, the FED is sticking a knife in yours. To quote Will Rogers, "Don't gamble, take all your savings and buy some good stock and hold it till it goes up, then sell it.  If it don't go up, don't buy it."

 

Regards,

Douglas

[pdx5]

Douglas, you are one of the smartest dudes here, who understands the FED.