Anonymous wrote:You have 2 options: Job growth or controlled inflation.

If you control inflation, you will end up with more unemployed people in an environment where the Fed has little appetite to spend to support workers and states have other issues to deal with such as rising health care costs social services etc.

If you want job growth, you will end up with inflation with wage growth likely below inflation.

Either scenario will not slow property tax increase adding further pressure to renters and homeowners.

Policy choices have consequences. And the bigger the economy the bigger the consequences.

History gives us answers. Every single economic crisis in his country has had devastating effects.

Anonymous wrote:You can, but, ceteris paribus, it will increase inflationary pressures.

Last week Mike Johnson, the speaker of the House, said something stupid. OK, that has been true every week of Johnson’s tenure. But this particular remark was right up this newsletter’s alley and suggested the topic for this week’s primer.

Here’s what happened: Johnson went on TV and supported Donald Trump’s demand that the Federal Reserve cut interest rates. Why should the Fed cut? Because, said Johnson — echoing Trump — “the American economy is hot.”

That sound you hear is thousands of economists slamming their heads on their desks. Interest rate cuts aren’t supposed to be a gold star the teacher gives you when you did well on a quiz. Interest rates are a tool for managing the economy — and a hot economy is a reason to raise rates, not cut them.

But I’m not sure how many people, even among those generally well-informed about public affairs, understand why economists say that. And I’m sure that relatively few people who aren’t economists know either how events and ideas led to the current consensus about interest rate policy or why there are real arguments among serious, non-MAGA people about the Fed’s next move.

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Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

I agree Powell has every reason to hate Trump because Trump is being a giant dick to him. Maybe I am naive but I think of Powell as a true technocrat that will take the course of action supported by the data regardless of politics and personal feelings. That and the other FOMC members will vote against him if he is wrong.

Agree, although he will of course have to include political analysis in what he does. He has to thread the needle he has been threading so far of doing the right thing while also keeping himself in the job through next June. If someone like Hassett is the next Chair, we are well and truly f---ed.

This is not directly related to this thread but I have been surprised by the fact the folks doing the biggest damage to our economy in this administration graduated from the colleges (Yale, Harvard, etc) that many of us want our kids to attend. What is it about their training from these universities that they make them mean, greedy, indifferent to the have nots etc ?

They (or their parents) likely lied, bribed, and/or cheated their way into those schools. When you get good results through dishonesty at the age of 18, you stick with what you know.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

I agree Powell has every reason to hate Trump because Trump is being a giant dick to him. Maybe I am naive but I think of Powell as a true technocrat that will take the course of action supported by the data regardless of politics and personal feelings. That and the other FOMC members will vote against him if he is wrong.

Agree, although he will of course have to include political analysis in what he does. He has to thread the needle he has been threading so far of doing the right thing while also keeping himself in the job through next June. If someone like Hassett is the next Chair, we are well and truly f---ed.

This is not directly related to this thread but I have been surprised by the fact the folks doing the biggest damage to our economy in this administration graduated from the colleges (Yale, Harvard, etc) that many of us want our kids to attend. What is it about their training from these universities that they make them mean, greedy, indifferent to the have nots etc ?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Rates are not that high and should not be cut. We need people to be saving more money. People are still spending money; if rates were cut they'd spend even more and prices would rise faster than wages.

Also, I think JPow will never cut rates during this administration out of spite. He's not wrong for refusing to cut though.

I agree Powell has every reason to hate Trump because Trump is being a giant dick to him. Maybe I am naive but I think of Powell as a true technocrat that will take the course of action supported by the data regardless of politics and personal feelings. That and the other FOMC members will vote against him if he is wrong.

Agree, although he will of course have to include political analysis in what he does. He has to thread the needle he has been threading so far of doing the right thing while also keeping himself in the job through next June. If someone like Hassett is the next Chair, we are well and truly f---ed.

This is not directly related to this thread but I have been surprised by the fact the folks doing the biggest damage to our economy in this administration graduated from the colleges (Yale, Harvard, etc) that many of us want our kids to attend. What is it about their training from these universities that they make them mean, greedy, indifferent to the have nots etc ?

Anonymous wrote:The jobs data today points to what we all know is coming. It’s just there’s a lag effect. For example, a guy who does tree maintenance in my neighborhood has complained that his business has been affected by the Fed jobs data cuts. The job cuts have effects on other industries like restaurants, salons, services. Beyond that fewer international travelers are coming here this summer. Those losses will be reflected in the fall. Trump wants rates to be cut because it will act as a short term stimulus. People can borrow more cheaply and it will give a boost to the economy in the short term. He wants things to look better ahead of the midterms.

Anonymous wrote:The jobs data today points to what we all know is coming. It’s just there’s a lag effect. For example, a guy who does tree maintenance in my neighborhood has complained that his business has been affected by the Fed jobs data cuts. The job cuts have effects on other industries like restaurants, salons, services. Beyond that fewer international travelers are coming here this summer. Those losses will be reflected in the fall. Trump wants rates to be cut because it will act as a short term stimulus. People can borrow more cheaply and it will give a boost to the economy in the short term. He wants things to look better ahead of the midterms.