5 ms·

that doesn't excuse the Fed's behaviors.

nerdponx 4y ago
Two wrongs don't make a right!
danielmarkbruce 4y ago
It's easy to criticize the fed, but they did a pretty good job during COVID and they did a pretty good job during 2008. The charge of "manipulating bond markets" is pretty absurd - their mandate is to influence inflation and employment via interest rates. Of course it has an impact on bond markets.
- yterdy 4y ago
  Not to let the banks off the hook, but >They did a pretty good job during COVID One word: "transitory".
  - danielmarkbruce 4y ago
    It was surprisingly accurate.... mom inflation has been reasonable for several months now
    - nervlord 4y ago
      That's.. Delusional. It's barely budged.
      - danielmarkbruce 4y ago
        https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf Note all the months since July 2022. It's good to read the source material rather than hyperventilating news articles.
        anon20230311 4y ago
        Mean MoM % change in CPI-U from January to preceding July, 2016-2023: * 2016: 0.01 * 2017: 0.20 * 2018: 0.27 * 2019: 0.10 * 2020: 0.21 * 2021: 0.30 * 2022: 0.61 * 2023: 0.27 Raw monthly data: https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_... I was skeptical that month-over-month CPI had come down to reasonable levels over a wider time window, but it is much lower than the same period a year ago, and close to recent historical norms outside that inflationary spike. I am eager to see Tuesday's numbers for February inflation.
    - yterdy 4y ago
      By that metric, and it took quite a bit longer to get there than ideal. It's also still elevated historically and compared to FFR, all of which is a roundabout way of saying that inflation has and continues to destabilize the outlook. Stability historically comes after an n-month lag of the FFR and core inflation meeting, right? Well, banks are failing now, and 4Q24 is a ways off. I just don't know if I'd call it a "pretty good job," is all. They were caught-off guard and didn't move quickly enough.
      - danielmarkbruce 4y ago
        They are always caught off guard. Try predicting anything macro and see how well it goes to plan. Then try not moving too fast or too slow. The idea that they aren't doing a good job because they aren't perfectly precise with their timing is misguided. It's a crazy hard job.
        yterdy 4y ago
        The difficulty is somewhat artificial. Their statements give away the game, namely their obsession with a "soft landing." Translation: an undue focus on securities markets and saving entities who'd made bad investments, i.e., picking winners. They were late because they were trying to balance a factor that isn't part of their quasi-mandate (but that is important to politicians, and to the institutions that Fed officers revolving doored from). Without that factor, you see radical hikes in 2021 and QT not being undermined by waves hands vaguely. It hurts, but less than what's coming now.
        danielmarkbruce 4y ago
        The only entities they seem to worry about is banks. And banks going under is bad news for everyone, always has been. Being a lender of last resort to banks is explicitly part of their mandate.
        pishpash 4y ago
        They worry about banks because they are a bank. If it weren't for government oversight they'd be a private bank.
  - chii 4y ago
    And it was. The prediction was that covid supply/demand constraints would resolve when covid problems clear themselves. Unless, of course, you are expecting the Fed to predict the war in ukraine, the energy crisis, etc. And in any case, people who take the Fed's predictions at face value, and base their financial positions on it, can only blame themselves when the Feds do something contrary (as they are always entitled to). These predictions aren't promises.
  - throw0101c 4y ago
    > One word: "transitory". It has been. We're barely at 1.5-2 years in length and it looks to be either stabilized and perhaps dropping. A number of folks estimated that the COVID recovery stimulus would take about this long to work its way through the system, using Korean War spending as an analogue: * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in... The fact that energy and food prices spiked due to geopolitical events threw a monkey wrench in the works temporarily, but now that those have stabilized, so has inflation.
    - yterdy 4y ago
      The magnitude matters, too. Stimulus did not constitute an annualized increase in average consumer purchasing power equivalent to the inflation we've seen. I imagine that wage inflation fills the difference, but of course, the stimulus is over and wage growth is not enough. So "transitory" is not an accurate characterization for most people looking at their finances; it has come to eat their purchasing ability, and stayed.
- pishpash 4y ago
  They did a terrible job after the Euro sovereign debt crisis passed, so let's say after 2014, and they did a terrible job starting mid-2021, after vaccines and opening up. Always too slow to raise rates and stop financial froth that was obvious to everyone. The first half of stopping a panic is always easy if you're the Fed with the exorbitant privilege to print money with virtually no immediate ill effects. The second half is the hard part and they've failed 11 times out of 10.
- adam_arthur 4y ago
  To say they did a good job during covid can only be determined through history… many would disagree. They acted as aggressively as possible to remedy a short term problem, which just created longer term problems. Its easy to throw money at a problem and worry about the consequences later. SVB wouldn’t have failed if the Fed hadn’t artificially suppressed rates to the extent they did, for example. And Id venture there’s a lot more to come on the economic front. Many assets became extremely overvalued which makes the larger downside on price more disruptive… commercial real estate is a big one to watch in the coming years If inflation remains entrenched we may require a GFC style hard landing to quench it. The fed did head off an immediate disaster through suppressing the rapidly widened credit spreads, but everything after that will likely be remembered as a failure
freejazz 4y ago
What's the fed's obligation to that bank that you are making this point?
- eschaton 4y ago
  Dollars to donuts they’re a “sound money” kook who wants the Federal Reserve not to be able to manipulate the money supply to achieve societal objectives like “low unemployment” and “inflation that closely tracks growth in economic activity and population” and “preventing a deflationary spiral because economic activity shut down due to a global pandemic” because all of that is interference with the Holy Free Market. Because after all the purpose of society is to serve the market, not the other way around, right?
reso 4y ago
The fed wasn't buying bonds for lulz, they were doing it to carry out their primary function.
SantalBlush 4y ago
Whether or not the Fed's behaviors are excused is not the topic of conversation.

Two wrongs don't make a right!

It's easy to criticize the fed, but they did a pretty good job during COVID and they did a pretty good job during 2008. The charge of "manipulating bond markets" is pretty absurd - their mandate is to influence inflation and employment via interest rates. Of course it has an impact on bond markets.

yterdy 4y ago
Not to let the banks off the hook, but >They did a pretty good job during COVID One word: "transitory".
- danielmarkbruce 4y ago
  It was surprisingly accurate.... mom inflation has been reasonable for several months now
  - nervlord 4y ago
    That's.. Delusional. It's barely budged.
    - danielmarkbruce 4y ago
      https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf Note all the months since July 2022. It's good to read the source material rather than hyperventilating news articles.
      - anon20230311 4y ago
        Mean MoM % change in CPI-U from January to preceding July, 2016-2023: * 2016: 0.01 * 2017: 0.20 * 2018: 0.27 * 2019: 0.10 * 2020: 0.21 * 2021: 0.30 * 2022: 0.61 * 2023: 0.27 Raw monthly data: https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_... I was skeptical that month-over-month CPI had come down to reasonable levels over a wider time window, but it is much lower than the same period a year ago, and close to recent historical norms outside that inflationary spike. I am eager to see Tuesday's numbers for February inflation.
  - yterdy 4y ago
    By that metric, and it took quite a bit longer to get there than ideal. It's also still elevated historically and compared to FFR, all of which is a roundabout way of saying that inflation has and continues to destabilize the outlook. Stability historically comes after an n-month lag of the FFR and core inflation meeting, right? Well, banks are failing now, and 4Q24 is a ways off. I just don't know if I'd call it a "pretty good job," is all. They were caught-off guard and didn't move quickly enough.
    - danielmarkbruce 4y ago
      They are always caught off guard. Try predicting anything macro and see how well it goes to plan. Then try not moving too fast or too slow. The idea that they aren't doing a good job because they aren't perfectly precise with their timing is misguided. It's a crazy hard job.
      - yterdy 4y ago
        The difficulty is somewhat artificial. Their statements give away the game, namely their obsession with a "soft landing." Translation: an undue focus on securities markets and saving entities who'd made bad investments, i.e., picking winners. They were late because they were trying to balance a factor that isn't part of their quasi-mandate (but that is important to politicians, and to the institutions that Fed officers revolving doored from). Without that factor, you see radical hikes in 2021 and QT not being undermined by waves hands vaguely. It hurts, but less than what's coming now.
        danielmarkbruce 4y ago
        The only entities they seem to worry about is banks. And banks going under is bad news for everyone, always has been. Being a lender of last resort to banks is explicitly part of their mandate.
        pishpash 4y ago
        They worry about banks because they are a bank. If it weren't for government oversight they'd be a private bank.
- chii 4y ago
  And it was. The prediction was that covid supply/demand constraints would resolve when covid problems clear themselves. Unless, of course, you are expecting the Fed to predict the war in ukraine, the energy crisis, etc. And in any case, people who take the Fed's predictions at face value, and base their financial positions on it, can only blame themselves when the Feds do something contrary (as they are always entitled to). These predictions aren't promises.
- throw0101c 4y ago
  > One word: "transitory". It has been. We're barely at 1.5-2 years in length and it looks to be either stabilized and perhaps dropping. A number of folks estimated that the COVID recovery stimulus would take about this long to work its way through the system, using Korean War spending as an analogue: * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in... The fact that energy and food prices spiked due to geopolitical events threw a monkey wrench in the works temporarily, but now that those have stabilized, so has inflation.
  - yterdy 4y ago
    The magnitude matters, too. Stimulus did not constitute an annualized increase in average consumer purchasing power equivalent to the inflation we've seen. I imagine that wage inflation fills the difference, but of course, the stimulus is over and wage growth is not enough. So "transitory" is not an accurate characterization for most people looking at their finances; it has come to eat their purchasing ability, and stayed.
pishpash 4y ago
They did a terrible job after the Euro sovereign debt crisis passed, so let's say after 2014, and they did a terrible job starting mid-2021, after vaccines and opening up. Always too slow to raise rates and stop financial froth that was obvious to everyone. The first half of stopping a panic is always easy if you're the Fed with the exorbitant privilege to print money with virtually no immediate ill effects. The second half is the hard part and they've failed 11 times out of 10.
adam_arthur 4y ago
To say they did a good job during covid can only be determined through history… many would disagree. They acted as aggressively as possible to remedy a short term problem, which just created longer term problems. Its easy to throw money at a problem and worry about the consequences later. SVB wouldn’t have failed if the Fed hadn’t artificially suppressed rates to the extent they did, for example. And Id venture there’s a lot more to come on the economic front. Many assets became extremely overvalued which makes the larger downside on price more disruptive… commercial real estate is a big one to watch in the coming years If inflation remains entrenched we may require a GFC style hard landing to quench it. The fed did head off an immediate disaster through suppressing the rapidly widened credit spreads, but everything after that will likely be remembered as a failure

freejazz 4y ago

What's the fed's obligation to that bank that you are making this point?

eschaton 4y ago
Dollars to donuts they’re a “sound money” kook who wants the Federal Reserve not to be able to manipulate the money supply to achieve societal objectives like “low unemployment” and “inflation that closely tracks growth in economic activity and population” and “preventing a deflationary spiral because economic activity shut down due to a global pandemic” because all of that is interference with the Holy Free Market. Because after all the purpose of society is to serve the market, not the other way around, right?

reso 4y ago

The fed wasn't buying bonds for lulz, they were doing it to carry out their primary function.

SantalBlush 4y ago

Whether or not the Fed's behaviors are excused is not the topic of conversation.