After the Federal Reserve incentivized borrowing with more than a decade of artificially low interest rates and easy money, the debt chickens are coming home to roost.
Last week, Fitch Ratings downgraded the US’s long-term credit rating from AAA to AA+, and on Monday, Moody’s cut the credit rating of 10 small and midsize banks.
The Federal Reserve advertises itself as “independent” and above the political fray.
The Fed is inherently political and makes decisions based on political calculations as much as economic data.
Is price inflation really heading back toward the Federal Reserve’s 2% target?
Most people in the mainstream seem to think so, and the recent drop in the consumer price index (CPI) appears to support this belief. Price inflation has trended downward over the last several months, with the annual CPI falling from a high of 9% last year to just 3% in July. But I don’t think the Fed has won the inflation fight and I don’t believe the central bank’s sanguine inflation outlook is correct.
I think easing price inflation is transitory.
The Federal Reserve raised interest rates yet again during its July meeting. So, what’s next? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the Fed meeting and the weird messaging, and then speculates about the central bank’s next move given the current economic backdrop. He also talks about a lucky Oklahoma woman and her bag of “junk” silver.
The Consumer Price Index (CPI) cooled in June. Year on year, the CPI increased by 3%. That was trumpeted as great news with some pundits suggesting perhaps 3% is low enough.
It’s not.
I’ll say this about the Federal Reserve: it tends to follow the script.
Everybody expected that the central bank would hike rates at the July FOMC meeting, and that’s exactly what it did. The Fed boosted the federal funds rate another 25 basis points to 5.25 to 5.5%.
The number of corporate debt defaults in 2023 has already exceeded the total number of defaults last year.
According to data from Moody Investment Services, 55 American-based companies defaulted on loans through the first half of 2023. That was a 53% increase over the total number of defaults in 2022.
People are confused about the definition of inflation. And because they don’t really know what inflation is, they can’t grasp what’s causing it.
Or how to fix it.
That’s why it’s imperative that we reclaim the meaning of inflation.
With the June CPI report coming in even cooler than expected, the mainstream perspective seems to be that the Federal Reserve is winning the inflation fight. But in his podcast, Peter Schiff explains why the dollar is telling a different story.
Can the Federal Reserve navigate a narrow path and slay price inflation while steering the economy to a soft landing?
During an interview on CNBC Squawk Box, financial analyst Jim Grant expressed his doubts.
He compared Jerome Powell’s task to Captain Chelsey Sullenberger’s when he was forced to land a US Airways plane on the Hudson River after an inflight emergency, noting Powell is “no Sully.”
Grant went on to explain that even if things don’t look so bad right now, rivets are popping in the economy.
