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>The Fed also said in the statement that the “fundamentals of the U.S. economy remain strong.” So why cut the rate? Doesn't make any sense.
by pastor_elm 7y ago
>The Fed also said in the statement that the “fundamentals of the U.S. economy remain strong.”
So why cut the rate? Doesn't make any sense.
- Angostura 7y agoBecause you can have a fundamentally strong economy, but nonetheless having up to 1/5th of you workforce off simultaneously (UK govt worse case) could cause business difficulties?)
- saber6 7y agoWhy does it not make sense? Interest rates are incentives. You want a balance between too hot (inflation) and too cool (deflation). Ideally with low single digit inflation to encourage investment rather than pure savings.
- wonderwonder 7y agoBecause someone at the top with a limited grasp of economics but a great understanding of campaigning insisted on it.
- lonelappde 7y agoThe Fed is independent of the Executive except at appointment time.
- wonderwonder 7y agoTheoretically yes, but all except one are Trump appointees and the main thing he looks for is loyalty. In addition, the threat of getting publicly hammered and humiliated by the president is often enough to make someone think twice before not doing what he asks.
- jjoonathan 7y agoLike the Judiciary is independent of the Executive and provides a check and balance to its power?
- AnimalMuppet 7y agoActually, yes. The judiciary does provide a check to executive power - just not as often as the press tells you it should.
- jjoonathan 7y agoI didn't buy that in grade school civics and I buy it even less today. No enforcement authority = no authority. It's really that simple. Strongly worded letters are pointless in a world where someone can hold them up, shout "Complete Exoneration!", and have their media apparatus repeat it until their followers believe it.
- Mountain_Skies 7y agoSounds like the Federal Reserve needs a backbone if they're so willing to change a major component of fiscal policy due to a few words.
- ptyyy 7y agoPolitical optics. Current POTUS's claim to success rests, in part, on a high performing financial sector. If the market tanks or stagnates, he no longer has that as a talking point.
- Loughla 7y agoI agree with the political optics part, and that the POTUS current claim to success is finances, but I 100% disagree that if the market stagnates or tanks completely that he no longer has that talking point. If the market tanks, all the talking heads will just blame the upcoming election, and claim that markets and market makers are scared of a Democrat being elected. It doesn't change the talking points for the President at all, I imagine. He still claims the moral victory, if only he hadn't been undercut by those thieves on the other side. That sort of thing is standard now. Claim success until you can't, then deny any involvement and blame someone else. That's politics, baby.
- shrimpx 7y ago“The market being in the red is a hoax perpetrated by the Democrats...”
- whatshisface 7y agoThe Fed is not under the President's authority and is probably not filled with Trump fans. The system for better or worse is designed to resist political motivations. (For better because "political," for worse because "political" is the low-valence word for "democratic.")
- standardUser 7y agoBowing to pressure from King Trump. Edit: Trump has loudly and consistently attacked the Federal Reserve for scheming against him and trying to sabotage the economy, something completely unprecedented considering the Fed is famously intended to be independent. He ratcheted up these complaints even further since the outbreak of Convid-19. Then, the Fed takes the unusual step of cutting rates between sessions (for the first time since the start of the Great recession) despite a strong economy. Edit #2: Now Trump has lashed out again, calling the Fed's move insufficient.
- ilikehurdles 7y agoSo has it been all but confirmed that the Fed is no longer an independent office?
- ars 7y agoTrump attacks all sorts of things. If people do things it's not always a result of him.
- lawn 7y agoThey said the exact same thing in 2008, only a few months before the collapse. It's fair to say, that the FED has no clue.
- spectramax 7y agoThat's a glib assessment of the Fed. In hindsight, every prediction will have cases that, in your view, would fit "They have no clue.".