Fear The Talking Fed! Fed Likely To Pause Tightening Despite Being Only Half Way Home (3.7% Unemployment Implies Target Rate Of 10.12% Versus 5.25% Rate, Fed Balance Sheet Still At > $8 TRILLION)

Confounded Interest ^ | 06/02/2023 | Anthony B. Sanders

[Kaiser8408a]

Don’t kid yourself. The talking heads at The Federal Reserve (more like Feral Reserve) are only about halfway there in terms of rate hikes. There is still over $8 trillion in monetary stimulus sloshing around the economy.

The Taylor Rule implies a target rate of 10.12% while the current target rate is just over half that rate at 5.25%. A little over halfway there and The Fed is likely to pause rate hikes.

Of course, Yellen and Powell think The Taylor Rule is a pork roll product from Trenton, New Jersey.

Fear the talking Fed!

[Kaiser8408a]

The Fed IS the Obama/Biden Administration.

[ConservativeInPA]

The other half of the equation is fearing government spending. That piece of chit McCarthy just made sure government spending is effectively unlimited for the next two years by eliminating the debt ceiling. The only recourse for the Fed is to print money, thus increasing inflation.

The comedian Steven Wright tells a joke about getting a humidifier and dehumidifier and putting them in the same rule and letting them fight it out. That’s analogous to simultaneously having increased government spending and increased interest rates. It’s a joke, but not a joking matter.

Ultimately, it will create hyperinflation.

[cgbg]

Hyperinflation is only possible when the dollar is no longer the de facto world reserve currency.

The only thing preventing that change is that other governments are also corrupt thieves.

[ConservativeInPA]

That is a myth. You are sorely mistaken.

[cgbg]

Please explain—with historical examples of hyperinflation (not just normal inflation) of world reserve currencies.

[Mariner]

“world reserve currencies”

Before the US dollar there was only gold as a “reserve currency”.

It is not possible to have previous examples.

[Matthew419]

You are misunderstanding inflation and particularly hyperinflation, if you think hyperinflation is not possible because we are the “worlds reserve currency”.

We have four distinct money supply metrics. M1-M4. When the Fed does QE they inflate M3 & M4. This effects stocks, real estate, and other investment vehicles. This is precisely why the S&P, DJI, Nasdaq, and house values went up but wages and commodities stayed relatively flat since 2008.

When Trump started spending like a drunken sailor in 2017-19, remember those stimmy checks. All of that hits M2 - which is money circulating in the general economy. Low and behold about six months later, commodities start going through the roof. I used to chart M1 & M2 every month and post it to my website until the Fed stopped reporting that number, which was about a year after Trump started his spending.

You can bet your buttocks that the new round of spending that your Congress Critters and the Duffus are getting ready to spend will cause massive inflation. Only this time I think it will hit M2-M4 so we should see inflation in equities and commodities.

The only commodity that I see going down will be gold and silver. I suspect there will be a buying opportunity of a lifetime ahead. The market has already priced in a rate cut or pause, this is evident in the price of gold and silver which have been going down.

I also think the crypto market is about to get lit as all those hedge-fund managers start getting fresh, cheap, cash from the Fed.

My two cents. Take it for what it’s worth.