When you don't succeed, it is easiest to change the rules. This is what the Fed did in regards to the metrics they are using to determine when to start tightening.
In this video I discuss how the shift from the U3 to U6 is a big deal which assures they will not hit the 5% level to stop easing. This is going to continue the money printing for the foreseeable future.
▶️ 3Speak
I am not surprised. The Fed wanted to stress test by 55% according to the tweet I saw and I think it was just to check the treasury bond stockpile. If they failed, I think they would just prevent stock buybacks as it doesn't help money circulating in the economy.
I completely agree that the economy will probably collapse once the measures in the economy are removed. There just isn't anything they can do because costs accumulate and eventually someone has to pay it back.
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The Fed is well aware of where the pitfalls are. They are holding out hope (desperation) that their money printing will turn into inflation but it is not looking good for them. They will get a bit of a tailwind for a couple years as commodities inflate due to supply issues. However, that is market corrected which happens in a few years.
Long term, ie 4 or 5 years (+) they are screwed.
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Welcome to my world. This is happening in many countries, mine especially for years. Doesn't even surprise me. It may be surprising in countries where it's not common.
Anyway, sorry it's happening over there.
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Ah the fed always looking out for us lol
I think they have dug such a huge hole that it's impossible to get out of. Legit we need to stop paying for everyone else and refocus on our country.
It wont matter. They are in a liquidity trap they cant exist.
Also the US has to support the global economy because as impotent as the Fed is, other central banks are even worse.
Ultimately, global collapse ends up affecting the US economy because the flow of capital is such that it all eventually ends up in the US.
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This is why I always enjoy reading your stuff and watching your videos. I always find it interesting and new perspectives on things as I myself simply can't keep up with it all. Plus I honestly find all of this fascinating but a bit scary at the same time. Gets my butt in gear to be more prepared.
In other words,they have no choice than to take such action immediately if they do not want more problems....
100% agree and Worth trying it for sure.
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Hyperinflation, here we come...
Care to give an enlightenment??
Not really. Four decades taught us Keynesians economics is a fraud.
Thus the money printing leads to inflation was proven wrong. The money printing is causing the economy to collapse.
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Wow four decades of deceits,that's really awful though...thanks for pointing that facts out....@taskmaster4450le
@taskmaster4450le I think the FED are having shortage of ideas on how they can make everything move forward...we need experts there....but at least they are finally admitting to the fact that they might need to change the rules...
There is very little they can do. They were boxed in for two decades.
Simply put, they are in a liquidity trap. If they stop the printing, thing collapse. Thus they have to keep printing which is slowly crushing things.
The only true solution is austerity which neither the fed nor politicians will opt for.
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Well change is constant and sometimes we need to make some changes in order to achieve some certain goals or aims...I am not sure what the future holds for the FED though....
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I think this has always been inevitable. My feeling was we crossed the point of no return a few years back but Covid definitely ended all chance of ever getting out of it. Now, it's just keep pumping air into the balloon and pray for a miracle. In the back of my mind, I still see war as a "solution" desperate politicians might turn to. I hope I'm wrong.
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Summary:
In this video, Task discusses the recent announcements made by the Federal Reserve, particularly focusing on the changes in their approach to monetary policy. He provides a background on the Fed's previous strategies under Bernanke and explains the new metrics and goals set by Powell. Task sheds light on the shift in focus from targeting a one-year inflation rate to a three-year average, as well as the move from using U3 to U6 employment statistics. The overarching theme of the episode revolves around the Fed's decision to essentially perpetually ease their monetary policies due to their inability to reach their targets for several years. Task highlights the potential consequences of these actions, including the impact on interest rates, the economy, risk levels, and the overall market reactions. He also touches on the challenges faced by the Fed in a deflationary environment and the inevitability of economic cleansing mechanisms having to come into play eventually.
Detailed Article:
Taskmaster 4450 delved into the recent revelations from the Federal Reserve, expounding on the significant changes in their monetary policies and strategic outlook under Chairman Powell. Task emphasized the Fed's historical struggle in meeting their targets since the Great Recession and the consequent shift towards a continuous easing strategy. He discussed how the inflation rate metric has now transitioned from a one-year focus to a three-year average, reflecting the Fed's recalibration of its approach to achieving price stability. Furthermore, Task highlighted the switch in employment statistics from the U3 to the U6, illustrating the Fed's changing methods in assessing full employment.
The overarching theme of the episode revolved around the implications of the Fed's decision to persistently ease monetary policies and the potential ramifications on various aspects of the economy. Task outlined the market's positive reception of the Fed's new direction, particularly benefiting stockholders, while acknowledging the impact on the majority of Americans who do not own stocks. He underscored the likelihood of continued low interest rates and the Fed's attempts to stimulate economic activity through strategic interventions.
Moreover, Task delved into the broader consequences of the Fed's perpetual easing, including the potential rise in interest rates, risks associated with lending, and the challenges posed by factors such as technological disruption, faltering economies, and increased unemployment. He foresaw a scenario where investors would demand higher returns in proportion to the escalating risks, creating a complex predicament for the Fed to navigate.
Task also touched upon the concept of economic cleansing mechanisms and the inevitability of market corrections clearing out zombie corporations, bad debts, and unworthy borrowers. He highlighted the interconnectedness of the financial system, pointing out how various entities, including pension funds and hedge funds, would be affected by these systemic changes. Additionally, Task briefly discussed stress tests on the banking system, assessing the potential impact of a significant stock market collapse on both banks and interconnected sectors.
In conclusion, Task's analysis provided a comprehensive overview of the Fed's new approach to monetary policy, emphasizing the challenges, uncertainties, and potential consequences associated with their perpetual easing strategy in a deflationary environment. He underscored the intricacies of the interconnected financial system and the likelihood of market corrections playing a significant role in the future economic landscape.