Federal Reserve Chairman Jerome Powell took his dovish message to the masses during a recent 60 Minutes interview.
Powell continued to talk about “patience” and reiterated that the Fed “does not feel any hurry” to push rates any higher. He also said the interest rate is “roughly neutral” at this point, calling the current 2.25-2.5% rate “appropriate.”
Central bankers and politicians think they can run the economy.
In this episode of the Friday Gold Wrap, host Mike Maharrey digs into some fundamental economic theories that explain why these central planners will always fail, no matter how noble their intentions.
Jerome Powell went to Capitol Hill this week and continued to preach patience. In other words, the Powell Pause is still firmly in play. In fact, the Fed chair confirmed that balance sheet reduction is a done deal. But why this sudden patience? In this episode of the Friday Gold Wrap podcast, Mike Maharrey talks about it. He also covers the Q4 GDP report, reveals some more bad economic data and reviews gold’s rollercoaster February.
After weeks of hinting, Federal Reserve Chairman Jerome Powell confirmed that the central bank will end its balance sheet reduction program this year. This just five months after insisting quantitative tightening was on “autopilot.”
“We’ve worked out, I think, the framework of a plan that we hope to be able to announce soon that will light the way all the way to the end of balance sheet normalization,” Powell said during testimony before the House Financial Services Committee.
Right after the last Federal Reserve Open Market Committee meeting, Peter Schiff said the “Powell Pause” won’t be enough to save the stock market and head off a recession. He said ultimately, the central bank would have to cut interest rates and launch another round of quantitative easing.
Well, it seems the mainstream is starting to catch up with Peter’s thinking. Yesterday, Bloomberg ran an article asserting that “instead of pausing, the central bank may need to start cutting interest rates to avoid a recession.”
A record number of Americans have fallen behind on their car payments.
On Tuesday, the New York Federal Reserve released its Household Debt and Credit report covering the fourth quarter of 2018. Not only has indebtedness hit record highs, eclipsing levels seen on the eve of the Great Recession, but Americans are also having a harder time paying their bills. This is particularly apparent in the US auto market. According to the New York Fed report, more than 7 million Americans have fallen at least 90 days delinquent on their auto loans.
All of a sudden, former Federal Reserve chair Janet Yellen sounds a little bit like Peter Schiff.
During an interview on CNBC, Yellen conceded that the next Fed move could be an interest rate cut.
Of course, it’s possible. If global growth really weakens and that spills over to the United States where financial conditions tighten more and we do see a weakening in the US economy, it’s certainly possible that the next move is a cut.”
After Jerome Powell indicated that the Federal Reserve tightening cycle was on pause during last week’s FOMC meeting, Peter Schiff said, “The monetary drug pushers at the Federal Reserve gave the addicts on Wall Street exactly the fix that they had been craving.”
Peter often compares the markets to drug addicts. They are addicted to the easy money the central bank provides. Reuters used that same imagery to describe America’s business community in the wake of the “loose money era,” saying it left a “trail of US corporate debt junkies.