The archive is catalogued by 'Economics', 'Politics', 'Mockingbird', 'And in other news' and 'Thoughts on other things' 


"Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world" - Henry Kissinger

and yet...

"Sooner or later everyone sits down to a banquet of consequences" – Robert Louis Stevenson

Sam Fleming analyses the September rate rise dilemma

In response to an FT article by Sam Fleming on 17th September 2015, entitled 'A guide to the Fed's rate rise dilemma'

1. "The case hangs heavily on the domestic US economy, which is outshining its overseas partners". 

The case also hangs on the likely imminent collapse of state and municipal pension funds, e.g. Illinois and Chicago. Schemes that require 8% cannot survive at ZIRP any longer. The Fed know this as does anyone else paying attention. The lack of mention of it by the Fed is because it would dispel the 'we are in control' narrative they have been desperate to promote in their 'jawboning' sessions

2.  "The jobs side of the equation is unequivocally strong"

If 'unequivocally' now means 'after counting anything over one hour a week as a 'job', and discounting everyone who'd like more work or has given up looking', then the job side of the equation is as fine an example of something that is unequivocal as you're ever likely to see.

On the other hand if 'unequivocally' still means 'without doubt' and 'unambiguous' then the one thing that is unequivocally true about the Fed is that they have consistently changed the goalposts and spun the data to suit their 'jawboning'. 

3. 'The Fed does not want to be dictated to by markets'

The Fed and the casinos on Wall Street (despite their hubris this does not qualify them as 'the market') are in a co-dependent relationship, not unlike that of a pusher and a drug addict. If the Fed weren't as clueless as they unequivocally are (there's that word again), they would have foreseen this sick relationship when they were warned about it by several market commentators at the commencement of QE. They are now so hooked that 'cold turkey' is the only thing that might work if miracles are on offer still. Unfortunately, the carnage that would ensue in the immediate withdrawal period, would inevitably lead to an audit of the Fed. I fear this would kill them, since it would reveal their manipulations in the futures markets...though of course we won't know whether these manipulations are 'unequivocal'...until we get the audit... 

Martin Sandbu thinks the Fed is 'state dependent'

Martin Wolf reflects on a 'growth recession' - Willem Buiter estimates there's a 40% chance