Monday, March 20, 2017

Why did the Fed hike the rates last week

The real reason Fed raised rates is even though their own GDP estimates have collapsed is because they care about investor confidence. Because the only people watching the Fed press conference are the investors. She knows it will boost investor confidence. What would have happened if she didnt raise rates ?The average consumer does not even know who Janet Yellen or the Fed is. 

If anything, you’ve had a collapse in [economic] growth estimates since the last time the Fed met. Yet that collapse in GDP forecast has not done anything to alter the Fed’s path because they’ve ignored all of the data, and they raised interest rates yet again. 

People are tapped out. People are not spending money because the economy is weak. Prices are rising, but their incomes are not. Department store sales are collapsing.

Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009

Sunday, March 12, 2017

Janet Yellen is partly to blame for Donald Trumps election victory

In fact it's been these low rates that are actually one of the reasons the economy has been so weak. This benefits the financial markets, it benefits the stock market, it keeps it propped up at artificially high levels, but it undermines the real economy. That's why so many Americans are hurting and why so many voted for Donald Trump.

What's appropriate and what the Fed is going to do are two totally different things. The Fed is going to raise interest rates as slowly as they can possibly get away with, and at some point they're going to have to come up with an excuse why they're going to stop raising rates, and why they're going to cut rates again and why they're going to go back to QE.

All of this is inevitable. But even if the Fed does nudge interest rates up a little bit more before they reverse course, it's not going to matter.

Inflation is headed up, not just on the consumer level but…inflation rising faster than any rate hikes we might get from the Fed. So real rates are going to be falling even if the Fed raises nominal rates.