Market Mania – FinX Weekly Top 10 #13
“In the face of pressure to lower rates, they’re going to lower rates.
They are.
Again, the rapidity doesn’t seem harmful. This is, unfortunately, political pressure that has the potential to cause trouble.
We might look back five, six, seven, eight months from now and say, “Oh, the Fed should have never cut rates.”
What kind of scumbag are you? The Fed should have never cut rates after beating the economy into submission?
This is how it always goes: the Fed is treated as if it’s perfect — 100% perfect in achieving desirable outcomes for the economy.
They’ve NEVER BEEN WRONG.
The only way we imagine them making mistakes is because we have the luxury of playing Monday-morning quarterback —
watching from the sidelines and looking at things in hindsight. They have to make the call in real time. We don’t.
We don’t have to cut rates, raise rates, or do nothing. They do.
So we critique. We lambast. We denigrate them to our heart’s desire. And we do.
We’ve got the “get out of jail free” card. They don’t. But that doesn’t change the fact that they’ve “never been wrong” — which is why we always call on the Fed to come to the rescue every single time.
And yet, it always unfolds this way: when they’re found at fault, it’s pinned on stupidity, negligence, or ignorance — not of monetary policy, but of fiscal policy.
Because here’s the truth: no matter what the Fed does, it can’t overcome the size or direction of fiscal policy.
The effectiveness of monetary policy is determined by fiscal choices.
The only entity with the real possibility of being wrong is on the fiscal side, not the monetary side.
Think about the function here: we’re calling on the Fed to do what? Save us from what?
From what we broke.
We break it on the fiscal side, and then we reach for the life preserver of monetary policy.”
– Seth Golden, Chief Market Strategist at FinomGroup.com
