Quote:
Originally Posted by KC911
Everything was going along very well with the early stages of the Fed reducing their balance sheet imo....while continuing to get the still ultra low rates back to normal. It's a HUGE task...they were able to jack them up much rapidly just a few years earlier...after 9/11....but in unknown territory....they couldn't raise rates from 0, when stimuli like the QE that ended in '13 (I think) was buying (borrowing) ...then '14 produced a couple of high gdp qtrs....deflation was over....time to dig out. So they began....
Early Dec, "I'm a tariff man" tweeted/spoke, and the markets immediately dropped like a rock...past long overdue correction territory...
Then the Fed turned from what I considered a very fiscally conservative, but somewhat aggressive "payback"..... it WAS working except for those hitched to historically low variable interest rates. The conservative in me says....(within reason)...I don't care...live within your means and don't depend on cheap credit...it's the opium of our society....worse than ever.
fint's a credit junkie 
When I read that the Fed was NEVER gonna reduce their 4T bs ANYMORE, at all....ever. Well....they caved to a correction in the still juiced equity markets...I'm a tariff man spoke and here we are 
Just scratching my head....fint, will you loan me a few T....I'll pay ya back....I promise...my credit's good |
Your time line is off, and it makes your conclusions off as well.
QE3 was announced in 9/12, where Equities were off to the races, Bullard said on CNBC on 2/23/13 that they would Taper Off finally announcing the Taper after a FED meeting several months later. Finally ceasing QEing in 12/14. After the end of QEing in 12/14 Equities remained more or less flat until Trump won in 11/16.
In 12/17 they started taking 50B a month out of the economy to reduce their balance sheet. In 2/18 Powell took over from Yellsin announcing that the FED would go to a NEUTRAL policy while raising interest rates The first big break in Equities came in February of 18...recovering to new highs in September 18...
With a continued hard line in the face of a projected softer economy Equites broke and ran in 12/18...ONLY TO MAKE A TURN ABOUT ON 12/26/18 AFTER THE FED MADE CONCILIATORY COMMENTS ABOUT POLICY (starting on 12/21/18 with the Pres of the NY FED)>>.
It is not a matter of being addicted to low interest rates..
.the low rates are a necessity especially since the US is encumbered with so much debt that needs to be serviced.
The US is borrowing money to pay the electric bills. Is that simple enough for you to understand..
Without deficit spending the economy does not generate enough of revenue to keep the economy afloat. The American consumer is a spent force...
The global economy needs financially healthy consumers to buy the crap that they make...if the consumers do not buy the economy tanks...