Those of us who criticize the Federal Reserve’s conduct of monetary policy are often ignored and sidelined during boom times. We’re supposedly the ones who are crashing the party, harshing the market’s vibes, always predicting doom and gloom. Well, there’s a reason for that, and that’s because the Fed’s inflationary monetary policy will always end in a recession or...
The Federal Open Market Committee (FOMC) voted last week to raise interest rates yet again, setting a target range this time of 2.00-2.25%. While that was expected by everyone and had been priced in already by markets, what took some people by surprise was the fact that the FOMC’s statement for the first time in years omitted the statement...
For decades stock markets have been viewed as proxies for the strength of the economy. The higher stock market indexes go, the stronger the economy is deemed to be. The most famous index, of course, is the Dow Jones Industrial Average, which in recent days has pushed back to record new highs. But while many people, President Trump included,...
One thing that’s almost universally true of the financial media is that they are ignorant of economics. Read just about any financial commentator and you’ll find articles chock full of bad economics and debunked fallacies. Whether it’s the “benefit” of higher government spending contributing to GDP growth, the necessity of the Fed to stimulate demand, or the broken window...
In the aftermath of World War II, the United States was not just a military superpower but also an economic superpower. As the world’s largest economy and with the dollar being established as the world’s reserve currency, the US government had no qualms about taking advantage of that position. Even in the aftermath of the breakdown of the Bretton...
It’s no secret that the US government has a problem with spending and debt. For decades the government has consistently spent more money than it takes in, requiring it to issue debt to fund its operations. Even the so-called years of budget “surpluses” in the late 1990s resulted in increases in the national debt since off-budget deficits outweighed on-budget...
Fed Chairman Jerome Powell attended his first Jackson Hole symposium as Chairman last week. His inaugural speech to the Kansas City Fed’s annual event was widely anticipated and closely watched by market observers. And to no one’s surprise, his understanding of the economy is just as flawed as that of his predecessors. Rather than understanding the economy as a...
Only a few days before Fed Chairman Jerome Powell is set to deliver his first address to the Kansas City Fed’s annual Jackson Hole summer gathering, President Trump has made it increasingly clear that he isn’t happy with the Fed continuing to raise interest rates. According to Trump, “I’m not thrilled with his raising of interest rates, no.” Of course,...
Chicago Fed President Charles Evans made headlines recently with his comments about higher inflation not being a problem. While the Fed has set a target of 2% for price inflation, and worried for years that inflation was lower than that figure, recent data indicates that inflation is trending higher and will continue to rise. According to the Bureau of...
You would think that with a national debt over $21 trillion and continuing to climb every day that the federal government would get serious about cutting back on spending sometime, but oh no. More and more we hear from Washington that the government isn’t spending enough. We need to spend more to to defend against the threat from North...