[ianai]

Remains to be seen how Powell and the current Fed perceive their joint mandate of low inflation/low unemployment. By indicators, the labor market is still resembling hermit crabs leaving shells empty anytime a shell gets filled with a crab. But I thought the market was overweighted in 2017/2018 and the Fed wouldn't raise rates until 2022.

As the economist stated here or elsewhere in this group of articles, the effects of raised rates take a year to take effect. It’s also economic dogma that the labor market reaches equilibrium after all the other markets.

Me, I’d raise rates no higher than 5.5% for a quarter or two. There’s every reason to not jerk so hard on the economy that the economy reacts wildly. I hope they're not seeking additional runway for a future regime of lowering rates. The time for that is a time that looks like 2017-2019-not a time compounded by fall out from pandemic, war, threats of war, and increased uncertainty. Ceteris paribus.

A wild reaction at this point looks like more people leaving the labor market than entering, I suspect.

Edit-economics in general may point to a recession. But this particular Fed has yet to convince me that they’re about their joint mandate of low unemployment and low inflation. They bought actual stocks (correction:bonds) during the Pandemic-a sure high point of departure from the past.

[cosmojg]

> They bought actual stocks during the Pandemic-a sure high point of departure from the past.

Is this true? I'm pretty sure the wildest thing they did was purchase corporate bonds via ETFs.

[ianai]

Buybacks were rampant through this era.

Difference without a distinction.

[gruez]

>Difference without a distinction.

No, you're just playing fast and loose with facts. The fed also financed the federal government through treasury purchases, and the federal government sent out stimulus checks to americans, some of which bought crypto/meme stocks, but it would be disingenuous to write a screed about how bad the fed is because they bought "crypto/meme stocks" using the aforementioned reasoning.

[ianai]

You got personal there.

[jjeaff]

I'm not aware of them buying any individual stocks recently. They did, however buy several (like GM) during the 2008 recession.

[ianai]

Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget.

I’d still largely say this Fed is departing from history. The economy last saw a pandemic like covid in 1918. And that was during a world war.

[gruez]

> Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget.

Who is "they"? The fed I presume? I doubt they were directly involved in foreclosures.

[awinder]

Bailing out companies keeps people in jobs & backstops the assets that comprise retirement/pension systems, both of which keep people in their homes. You could find ways of keeping more people in their homes but they’d almost certainly include bailing out companies, it’s easy to implement and cost effective.

[speakfreely]

> Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget.

So you would've preferred that the whole system came crashing down and believe that average people would've had a better long term outcome from that?

[spacemadness]

I think there’s a good argument to be made that lots of companies doing bad things and taking bad risks socialize their failure, thus learning nothing except they can get away with it again on the publics dime. Being too big to fail is an added bonus. How is the public better off in that scenario? Regulation can act as a bandaid but there is always another loophole to exploit.

[ianai]

There could have been a round of modern “trust busting” ala Teddy Roosevelt. Too big to fail is a clear center of too much market power. (That the smaller banks like credit unions weathered that era better underscores the need for some “right sizing”.)