#FED If 2% inflation is FED’s target, and inflation now 2.2%, why is Fed still raising rates 3 more times this year? Answer: to finance annual $trillion dollar US deficits 2018-28 (and $12.4t more US debt). That means FED’s 2% target inflation is phony goal, and always has been.
@drjackrasmus
#tradewar What does the US want from China trade negotiations? Limits on tech transfer and access for US banks. Trump will back off tariffs for that. What’s the US domestic politics behind it? Listen to my weekend interview. To watch go to Youtube at:
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#USStockBubble Listen to my analysis of the current state of US stock and financial market bubbles and the growing likelihood of a second major ‘correction’. A look at the forces driving the bubble, and the countervailing forces beginning to build. Go to
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#KORUS trade agreement. Listen to my 10 min. radio interview analyzing the just signed US-Korea trade deal. There’s no ‘trade war’ emerging. Korean deal is template for NAFTA & Europe. US steel tariffs phony tactic. US-China deal will be concluded. Go to:
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#Fed For my just published article in the World Financial Review, on the direction of the Powell Fed’s current rate hike policy and its consequences for the US and global economies, go to: http://www.worldfinancialreview.com.
@drjackrasmus
#Fed Read my analysis of Powell Fed rate policy & consequences, in my just published article in World Financial Review. Go to http://www.kyklosproductions.com/articles.html , or to the WFReview’s website. For reviews of my book, Central Bankers at the End of Their Ropes, go to: http://www.kyklosproductions.com/reviews.html
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#Fed Is there a connection between Fed rate hiking and Trump’s $1.3 trillion spending bill & $300b more deficits&debt? Yes, Fed must now sell trillions more T-bonds ($400b just this week) to finance the deficits. That increases T-bond supply, lowers T prices, and raises rates.
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#Fed Is there a connection between Fed rate hiking and Trump tariff-trade policy? Yes, as Fed raises rates it will slow the economy and make 2% rate target harder to get; Trump tariffs will raise prices on imports and allow US protected companies to raise prices as well
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#Fed Why will liquidity-credit crisis 2018 occur sooner than it did in 2008 with rate hikes? Answer: collapse of interest rate elasticity to real investment relationship. Reason: new global finance structure & shift to financial asset investing at expense of real asset investing
@drjackrasmus
#Fed Fed raised rates to 5.25% in 2008 precipitating the crash of 2008. It won’t take that in 2018 for same. Max is 2.5% fed funds rate, 3% rate 3mo. LIBOR, 3.5% 10yrTreasury bond. Why less this time? $70 trillion total US debt vs. $50T in 2007. Business more leveraged today
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#Fed Fed chair Powell cites low inflation (1.5%) as excuse TO raise rates; Yellen- Bernanke for 7 years cited low inflation (1%) as reason NOT to raise rates. Who’s right? Neither. Rates rising now to sell T-bonds to pay for $10T Trump deficit from tax cuts &. spending 2018-27
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Fed raised rates to 5.25% in 2008 precipitating the crash of 2008. It won’t take that in 2018 for same. Max is 3.5% fed funds rate, 3.5% 10 year Treasury bond rate, or 3.5% LIBOR. Why less this time? $70 trillion total US debt vs. $50T in 2007. Business even more leveraged today
@drjackrasmus
DOW drops 724 pts. If no recovery tomorrow, trajectory is a 10%-20% correction. Why the drop? Triple witching: Fed rate hike + 6 more 2018-19, Trump trade war with China and retaliations, and Facebook event as beginning of Tech sector correction.
@drjackrasmus
Why is Trump on the campaign trail, holding public meetings everywhere with his base? Because the base still supports him, despite chaos and mass defections in govt. It’s his best defense when he soon fires prosecutor Mueller when he reveals Trump’s Russian oligarch connections
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Tillerson out; Pompeio in. The consequences: 70-30 chance Trump will break the Iran treaty by June. If he does, no chance of any deal with No.Korea. 60-40 chance Trump will never meet with Kim. The CIA just took over the State Dept. Mass exodus of career personnel underway
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What’s behind Trump’s tweeting about steel, auto and other tariffs? Start of a trade war? No way. Just playing to his base. Trying to inject himself into negotiations via tweets. Changes to NAFTA will be via ‘tweaks, not tweets’. And by US elites, not Trump. No big changes coming
Jack, what do you believe is the provenance of the 2% inflation goal?
mz
Isn’t it ironic that rising rates for T-bonds because of the $1.3 trillion spending bill and the Fed’s turn to QT pushing the 10 yr rate to 3.5% or more would precipitate a crash, because then will follow a flight to safety and, presto, the rates will then decline. An exquisite matter of timing; if only everyone who was shortly about to buy T-bonds would do so early!
And when the rates decline to near zero once again, can we expect another 7 years (again) of zero rates (and free m oney again for the banks!). That’s why I argue in my book the Fed has evolved from a ‘lender of last resort’ to a new primary function in the 21st century of bank subsidization function..