The greatest disconnect in the world today must be the vast chasm between what the Federal Reserve “thinks we think” and what the rest of us “actually think”.
What the Fed “thinks we think” is that there’s some significant possibility that they will raise rates sometime soon.
What we “actually think” is that any meaningful hike in rates will instantly implode the entire economic Ponzi scheme they have constructed.
But the Fed keeps playing along with their ludicrous kabuki as if there’s someone out there besides the editorial boards of the Economist and the Wall Street Journal that’s still fooled.
So yesterday at the Center for Strategic and International Studies, the Fed trotted out their blondest member of the board of Governors to explain that there might, um, be a little delay in those rate hikes – it became a bit like a comedy routine. Now, whenever the Fed proffers-up their latest reason that rates can’t be raised, we feel a bit like we’re waiting for a punchline.
Welcome to comedy hour (via Reuters):
It may be impossible for the Federal Reserve to raise interest rates until the rest of the world economy improves, Fed board member Lael Brainard said on Tuesday, in the most direct acknowledgement yet of how weak global markets could handcuff the U.S. central bank.
Ah, so that explains the delay. We just need to wait for the world economy to deleverage, then we’ll be able to raise rates. So, like maybe next Tuesday or so?
Lael goes on to explains the problem in all of it’s completely unsurprising detail:
The underlying momentum of the recovery has proven relatively susceptible to successive headwinds. … There is value to watchful waiting while additional data help to clarify the economy’s underlying momentum.
You don’t say.
Brainard, who is hyper-attentive to the impacts of globalization given her prior role as head of international affairs at the U.S. Treasury, sketched out a world in which a strong dollar, weak overseas demand, and even Chinese wage rates were holding back the U.S. recovery and potentially slowing the Fed’s progress towards more normal monetary policy.
[Drum hit. High hat]
Call us crazy, but we don’t see the Fed moving any time soon.