In this week’s Off The Cuff podcast, Chris and John Rubino discuss:
- The Fed’s Desperation
- It’s just playing for time at this point
- Why Lower Rates Will Blow Up The System
- ZIRP/Negative rates create all sort of perversities
- Italy Threatens To Revert To The Lira
- Is the Eurozone about to break up?
- Bad Corporate Debt Is The Ticking Time Bomb
- There’s simply way too much of it now
In this excellent analysis, John does an exceptional job clarifying the unique point in economic history in which we live. The Federal Reserve is truly out of ideas at this point; it is simply playing for time until the system breaks:
The point in the cycle where we are now is a really unusual time to talk about lowering interest rates. Normally when the labor markets are this tight, and wage inflation is running around 3% which it is right now, the Fed is usually tightening. Wage inflation is a kind of inflation they understand. This is as opposed to stock prices going up, bond prices, or house prices going up. That is inflation, but they do not count it as inflation. When wages go up, they usually start raising interest rates. It is really telling that they are seeing things that lead them to maybe start easing again even with the economy, in theory at least, still growing ten years into the beginning of an expansion.
by evogan