“Janet, there’s just no way we can raise rates again this month,” is the conversation that went on Tuesday at the Federal Reserve meeting in DC.
The Fed chief has the data, which is telling her to pause, but she needs to raise rates for no other reason than to have the ability to lower them later this year.
Listen, with a Q1 GDP number of 0.7 growth and the last jobs number of 98K, it suggests this economy barely has a pulse, despite what the stock market says. The Nasdaq is not the US economy, and I will also say that equity markets are no longer a leading indicator of where the economy will be in 6-to-9 months from now.
Here’s a better indicator of what’s happening in the US economy and why so many retailers are on the ropes fighting off bankruptcies by closing stores and firing people.
More adults are living with their parents and grandparents than ever before — 19% of the US population (or nearly 61 million people) now live in a multigenerational household, up from 17% (42 million) in 2009 and 12% (27.5 million) in 1980, according to the Pew Research Center, nonprofit think tank based in D.C.
It’s not a failure to thrive, it’s a failure to survive. An astonishing 50% of adults in the US cannot come up with the cash for a $500 emergency. What does Dow 21K mean to them? Not much more than making them feel more inadequate.
So Janet, you want to be able to raise rates again this year, take some of the cash that comes into the Fed — on a daily basis — from all the bonds and mortgages that you bought from the banks and instead of reinvesting those billions back into the banks to buoy their balance sheets, let it loose in the economy for the uninvested hordes to get a chance at living.
The Haves already have everything they need from the last eight years of Fed actions. They Have-Nots need a leg or two up. They are suffering from your policies of bailing out the banks to the detriment of the economy.
Tell the banks that the “excess reserves” sitting at the Fed collecting interest should be used to write loans and pay a bigger interest rate on savings. Why is the Fed paying banks more interest to keep cash on the sidelines than depositors get on their savings?
It’s preposterous that the banks make interest on the bailout funds they get from the Fed to do its bidding, but then again they own the Federal Reserve, so Janet is just placating her masters.