Mr.Chris Waller, who is on the list of candidates to become the next Fed Chair, allegedly expantiated that the Fed had not been following the data; instead had paused the easing cycle on assumptions about tariffs that were (his words) "counter to economic theory."
SEE MOREThe actual U.S. playbook at assidous work is quite different. Solutions to the debt problem: Getting the economy on a 3%+ growth path and creating new Treasury demand through regulated dollar stablecoins. On the former, better growth will drive down the debt-to-GDP. On the latter, fresh global demand for Treasuries will put downward pressure on market interest rates
SEE MOREThe three months average on payrolls (job creation) had dipped below 100k for the first time since the depths of the covid lockdowns. Add to all of this, the BLS had just made the largest negative one-off adjustment to job growth (-818k) since 2009 (the depths of the financial crisis). With the risks "balanced" between inflation and the labor market, the Fed decided to cut by 50 basis points -- with the stock market on record highs.
SEE MOREThe precise job market that has averaged just 27k net new jobs over the past four months. Perhaps is the OVER-reporting of jobs in the first seven months of the year, and clearly this is not the job market,the Fed has been incorporating into its policy making decisions. And with that, the question is: would the Fed have cut rates earlier this year had they been privy to the numbers in the final revision column of the table above?
SEE MOREMeanWhile,The Federal Circuit court's ruling on Friday that Mr.Trump's tariffs are illegal will be appealed to the Supreme Court. "If the tariff policy were to be unwound, it would be an economic bomb". The fiscal position and outlook would swing from improving, to severely deteriorating. The monetary policy wouldn't just be too tight, the Fed would be forced back into emergency policy mode, including QE --first to stabilize the bond markets, and then to pump liquidity into the system.
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