Well, here we are again – at yet another fork in the road that never would have existed if not for Yellen and the Federal Reserve.
The Yellen posse concludes its November meeting today, and, with the presidential election a week away, there’s no chance the Fed governors will hike rates. They’d be lambasted globally (and probably threatened with a Trump lawsuit) for playing politics. And given the depths to which the Fed’s credibility has sunk, the Yellen gang has no stomach for yet more negative press.
It’s that credibility, however, that worries me at this point.
It’s Damocles’ sword hanging over the markets and, thus, over all of us.
While this November meeting is largely a chance to smile for the cameras, the December meeting bears the weight of every major stock and bond market in the world. What the Fed chooses to do next month will send stock and bond prices either up or down, and potentially meaningfully.
And the question, of course, is: Does the Yellen & Co. raise rates as it has promised to do through all of 2016?
Or does it realize that raising rates carries with it all the wisdom of a dimwit playing Russian roulette with six bullets in the chamber?
I’ve consistently written since May 2012 that the Fed will not raise rates. And since May 2012 I’ve consistently been correct – except for once.
A year ago in December, when the Fed raised rates by a quarter of a percent, its first rate hike in nearly a decade.
That is the only time I was wrong. And I was wrong only because the Fed caved in to Wall Street pressure and the Fed’s own stupidity. Fed governors had been yapping for so long about raising rates – and how the weak-kneed U.S. economy was well-prepared to handle it – that Wall Street either believed the BS or it simply wanted to call the Fed’s bluff to prove the point that the U.S. economy isn’t prepared for higher rates and has, like a druggie reliant on his pusher, become overly reliant on Fed money to maintain some semblance of life.
The proof that the Fed made the wrong decision is apparent across this past year. Economic growth has floundered to the point that the Fed’s early expectations of as many as four rate hikes this year has, instead, come down to this: the remote possibility that the Fed might raise rates once.
And if it does, it will be yet another in a long line of Fed blunders.
Swallowed by Debt
Despite the blathering from economic sycophants and a media that has the analytical aptitude of a goldfish in a glass jar, the U.S. economy is not robust. I’ve spelled out why many times so I won’t spill more ink here. Suffice it to say that the jobs we’re creating are great in quantity but lackluster in quality. The unemployment rate, meanwhile, is a fiction. Recent data show that many Americans have …