4 ms·

We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. I don't know if it's the fed or if the governmen

We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. I don't know if it's the fed or if the government pushing to win elections, but feels like we didn't take care of the house in good times and we have led ourselves into this cycle.

r00fus 5y ago
Hmm - I wonder who appointed the current Fed chair?
- jonathanpeterwu 5y ago
  Yeah no doubt about this. But its also important to remember we've been doing this non stop since 2008 minus a few months in 2018. So this is a multi president, both parties are involved in continuing this train.
  - spaetzleesser 5y ago
    People have been conditioned to believe it's either one or the other party's fault. And they decide whether things are going well or not so well based on whether their favorite president is in power. Nobody looks at the actual data.
- stjohnswarts 5y ago
  The current Fed chair has basically the same idea on economics as Yellen. Likely not much would have changed if she'd stayed in office.
  - nostromo 5y ago
    True -- but note that Yellen was appointed by the same president.
    - stjohnswarts 5y ago
      Not true. Yellen was appointed by Obama, Powell was appointed by Trump.
trustfundbaby 5y ago
>We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. Most of the money printing happened in 2020 and after. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- bduerst 5y ago
  *Printing money, but in response to covid stagnation in 2020. Printing and interest rates are separate. There was still a missed opportunity to increase interest rates while the economy was running hot prior to 2020.
- np_tedious 5y ago
  It's not as dramatic as that looks. They changed the definition of M1. From the same link: Before May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institutions. Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately.
- colinmhayes 5y ago
  m1 graph is incredibly misleading because they changed the definition, and even before it was still quite limited. Here's the real money supply https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS
spaetzleesser 5y ago
Slowing down GDP growth or the stock market would have been political suicide. It would probably have been a good thing in the long-term but long-term planning is not feasible anymore in the current climate. Sadly it's a winning strategy to inflate bubbles.
drexlspivey 5y ago
The FED balance sheet was decreasing from Jan 2018 till covid hit and it was stable the 4 years prior to that
01100011 5y ago
IIRC the fed tried a few times to tighten and the market reacted badly(i.e. taper tantrum). Rather than focus on economic health, Powell chose to support asset prices owned by the upper half of Americans(and, by a huge majority, the 1%). That sort of makes sense given Powell was a Trump appointee and Trump favored a weak dollar in order to boost American manufacturing.
adam_arthur 5y ago
Because Powell cares more about markets than the real economy or wealth inequality. Also they tend to care much more about the short term than the long term. People will tell you that it's not in the Feds mandate to care about those things, and they don't actually care about markets, but it's clearly not true when cast in the light of their actions. Or to any rational observer that follows them closely. Even in Powell's presser today he spent a lot of time talking about being sensitive to markets. Why didn't they raise rates in the entire year while inflation was increasing and the labor market already showed signs of overheating? That one's easy too. Because Powell's nomination was coming up and he wanted to maintain easy policy to boost his chances to get reappointed. Why did they continue QE policy of buying assets to drive down interest rates while inflation was over 7%? Because he knew if he ended it abruptly it would cause a market selloff. He cares about the real economy to the extent that their policy doesn't significantly impair asset pricing. Pretty sad tbh
- ShivShankaran 5y ago
  sad but true. The only thing that Jpow cares about is the markets. In his defence the economy is made of people and crashing the market/causing recession is going to cause more grief to the public that is already overwhelmed with covid.
  - adam_arthur 5y ago
    Yeah, but it's a kicking the can down the road kind of situation. The mistake of acting too late has already been made. Pushing asset prices higher and higher beyond what a neutral interest rate would support just sets up bigger declines in the future. At least a lot of the froth in the higher multiple stocks has been cooled off at this point.
danielmarkbruce 5y ago
They did raise rates.

r00fus 5y ago

Hmm - I wonder who appointed the current Fed chair?

jonathanpeterwu 5y ago
Yeah no doubt about this. But its also important to remember we've been doing this non stop since 2008 minus a few months in 2018. So this is a multi president, both parties are involved in continuing this train.
- spaetzleesser 5y ago
  People have been conditioned to believe it's either one or the other party's fault. And they decide whether things are going well or not so well based on whether their favorite president is in power. Nobody looks at the actual data.
stjohnswarts 5y ago
The current Fed chair has basically the same idea on economics as Yellen. Likely not much would have changed if she'd stayed in office.
- nostromo 5y ago
  True -- but note that Yellen was appointed by the same president.
  - stjohnswarts 5y ago
    Not true. Yellen was appointed by Obama, Powell was appointed by Trump.

trustfundbaby 5y ago

>We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. Most of the money printing happened in 2020 and after. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL

bduerst 5y ago
*Printing money, but in response to covid stagnation in 2020. Printing and interest rates are separate. There was still a missed opportunity to increase interest rates while the economy was running hot prior to 2020.
np_tedious 5y ago
It's not as dramatic as that looks. They changed the definition of M1. From the same link: Before May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institutions. Beginning May 2020, M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts). Seasonally adjusted M1 is constructed by summing currency, demand deposits, and OCDs (before May 2020) or other liquid deposits (beginning May 2020), each seasonally adjusted separately.
colinmhayes 5y ago
m1 graph is incredibly misleading because they changed the definition, and even before it was still quite limited. Here's the real money supply https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS

spaetzleesser 5y ago

Slowing down GDP growth or the stock market would have been political suicide. It would probably have been a good thing in the long-term but long-term planning is not feasible anymore in the current climate. Sadly it's a winning strategy to inflate bubbles.

drexlspivey 5y ago

The FED balance sheet was decreasing from Jan 2018 till covid hit and it was stable the 4 years prior to that

01100011 5y ago

IIRC the fed tried a few times to tighten and the market reacted badly(i.e. taper tantrum). Rather than focus on economic health, Powell chose to support asset prices owned by the upper half of Americans(and, by a huge majority, the 1%). That sort of makes sense given Powell was a Trump appointee and Trump favored a weak dollar in order to boost American manufacturing.

adam_arthur 5y ago

Because Powell cares more about markets than the real economy or wealth inequality. Also they tend to care much more about the short term than the long term. People will tell you that it's not in the Feds mandate to care about those things, and they don't actually care about markets, but it's clearly not true when cast in the light of their actions. Or to any rational observer that follows them closely. Even in Powell's presser today he spent a lot of time talking about being sensitive to markets. Why didn't they raise rates in the entire year while inflation was increasing and the labor market already showed signs of overheating? That one's easy too. Because Powell's nomination was coming up and he wanted to maintain easy policy to boost his chances to get reappointed. Why did they continue QE policy of buying assets to drive down interest rates while inflation was over 7%? Because he knew if he ended it abruptly it would cause a market selloff. He cares about the real economy to the extent that their policy doesn't significantly impair asset pricing. Pretty sad tbh

ShivShankaran 5y ago
sad but true. The only thing that Jpow cares about is the markets. In his defence the economy is made of people and crashing the market/causing recession is going to cause more grief to the public that is already overwhelmed with covid.
- adam_arthur 5y ago
  Yeah, but it's a kicking the can down the road kind of situation. The mistake of acting too late has already been made. Pushing asset prices higher and higher beyond what a neutral interest rate would support just sets up bigger declines in the future. At least a lot of the froth in the higher multiple stocks has been cooled off at this point.

danielmarkbruce 5y ago

They did raise rates.