Fed Up Friday: Rate Hike Likely, But Fed Still Recession-Deniers

Across the world this week, many different political strains were generating economic challenges. Venezuela is producing a cautionary tale about hyperinflation, while Italy began expressing its own populist movement. Meanwhile, the Fed has begun nervously testing the waters of the future Trump administration.

Venezuela Issuing 20,000 Bolivar Notes to Combat Worthless Currency

Venezuela’s Runaway Inflation is continuing to force policy makers to come up alternatives. One of the alternatives is the issuing of six new bills, which includes a new 20,000 bolivar. The super note will be worth 200 times more than the cash-heavy country’s current highest denomination.

Venezuela’s inflation is expected to triple in 2017. Currently, 4,400 bolivars will get you one US dollar.  There seems to be no end in sight for the free-fall currency, which is creating shortages in food and medicine.

Trump Economic Advisor wants Fed to Get out of Economic Driver’s Seat

Judy Shelton, co-director of the Sound Money Project and Trump economic advisor wants the Fed to take a back seat to the economy, according to an interview with CNBC. Shelton said she thinks effective growth will come from increased productivity and tax reform, rather than the Fed’s failed monetary policies.

Markets seem to be buying into the game plan with asset prices continuing to climb, but there’s little thought being given to the effects of Trump’s planned fiscal stimulus, which would increase the deficit during an increase in interest rates. Still, Shelton doesn’t believe that the expected small rate hike next week will derail the rally.

5 Things to Watch for at the Fed’s December Meeting Next Week

As the December Fed meeting looms next week, the unanimous consensus is that we will have a new, higher rate at the end of it. But why the hike now? The main reasons could be the recent uptick in the markets, as well as investors’ positive outlook for Trump’s policies. Bloomberg columnist and chief economic advisor at Allianz SE Mohamed A. El-Erian created a useful article of the five key things to look for at the meeting.

Fed’s Recession Denial Making Them Nervous about Trump

The Fed may have backed the economy into the corner, but they still don’t see it. In a recent Fortune article, one Fed official stated “The economy is not in recession today,” despite mounting evidence to the contrary. The Fed is in denial of America’s addiction to easy credit and the bubbles their policies have created.  

Peter Schiff put it best: “The problems haven’t been solved, and they can’t be solved unless we’re willing to bite the bullet and allow a painful economic restructuring that is going to be necessary for to pave the way for real economic growth.”

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