Fed's Powell Declares 'Time Has Come' for Rate Cuts (wsj.com) 106
Federal Reserve Chair Jerome Powell gave his strongest signal yet that interest-rate cuts are coming soon, saying the central bank intends to act to stave off a further weakening of the U.S. labor market. From a report: "We do not seek or welcome further cooling in labor market conditions," Powell said in prepared remarks for a speech at the central bank's annual gathering in the Grand Teton National Park on Friday. "The time has come for policy to adjust." Fed officials' next policy meeting is scheduled for Sept. 17-18. They are widely expected to lower the benchmark federal-funds rate at that meeting.
Powell's comments Friday all but bring to a conclusion the Fed's historic inflation-fighting campaign, one that Powell amplified from the same stage two years ago when he signaled his readiness to accept a recession as the price of lowering inflation. The Fed held rates steady at its most-recent meeting in late July, though several officials saw a case for cutting at that meeting. Two days later, the Labor Department reported that unemployment rose to its highest rate in nearly three years. Inflation, while still above the Fed's 2% target, has been falling steadily in recent months.
Powell's comments Friday all but bring to a conclusion the Fed's historic inflation-fighting campaign, one that Powell amplified from the same stage two years ago when he signaled his readiness to accept a recession as the price of lowering inflation. The Fed held rates steady at its most-recent meeting in late July, though several officials saw a case for cutting at that meeting. Two days later, the Labor Department reported that unemployment rose to its highest rate in nearly three years. Inflation, while still above the Fed's 2% target, has been falling steadily in recent months.
Let inflation reign (Score:5, Insightful)
With this anticipated upcoming rate cut, you can be guaranteed inflation will come back. But hey, it will be another excuse for companies to raise prices by claiming they have to keep up with inflation.
You could cut interest rates to -100 (Score:1, Insightful)
Raising interest rates is only designed to cause mass layoffs with the assumption that we are all going to get fired and be forced to take shittier lower-paying jobs and therefore have to blow through our savings and spend less.
So not only does it not help inflation but it screws over every single person reading. Even the childless retirees don't come out ahead because prices aren't go
Re:You could cut interest rates to -100 (Score:4, Interesting)
And it wouldn't affect inflation in the slightest because monopolies and price gouging is what caused our inflation.
Those are lies and official Demcrat political talking points. Grocery stores (like Kroger) have tiny margins [ycharts.com]. As competent econmists agree "Inflation Is Always and Everywhere a Monetary Phenomenon, Even in Pandemic and War [austrian-institute.org].
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NOT lies. The price gouging is from the producers especially snack companies: shrinkflation etc.
Grocery stores do have tiny margins (on brands; I don't know about house-brands).
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You looked at costs, did you look at profits?
https://fred.stlouisfed.org/se... [stlouisfed.org]
Did you look at the impact on consumers?
https://fred.stlouisfed.org/se... [stlouisfed.org]
Re:You could cut interest rates to -100 (Score:4, Insightful)
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However, in reality, as the quote says "Inflation is everywhere and always a monetary phenomenon." That means it's always caused by government increasing the money supply. Now, how does government increase the money supply? Well, that's a more complex topic (short answer: deficit spending) and there are several dimensions, but the point is that they do it and then when the monetary inflation causes consumer prices to rise, they blame speculators
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Which is a false statement. Corporate profits are at a 70 year high as a result of greedflation [yahoo.com]. Companies increased prices at a far higher rate than inflation simply because they could. The lies of salary increases or supply shortages don't hold water in 2023 or 2024. By raising prices companies are creating the very inflation t
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Re: You could cut interest rates to -100 (Score:2)
That's over half and you're pretending it is inconsequential. You think you're not a liar?
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Which is a false statement
Yeah, let's all believe "smooth wombat" over Milton Friedman, Keynes, Mises, Sewell, etc... Did you consider that corporate profits could be up and inflation could stilll be additionally driven by government deficit spending and money printing and the monetary inflation and subsequent price inflation that causes ? Do you have an explanation for why everything is more expensive, not just food? Are you just going to ignore the PPI? Here's an exerpt from Keynes Essay on Inflation & Deflation [economicsnetwork.ac.uk] which you appe
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And it wouldn't affect inflation in the slightest because monopolies and price gouging is what caused our inflation.
Those are lies and official Demcrat political talking points. Grocery stores (like Kroger) have tiny margins [ycharts.com]. As competent econmists agree "Inflation Is Always and Everywhere a Monetary Phenomenon, Even in Pandemic and War [austrian-institute.org].
My favorite was Senator Warren blaming egg prices on "Big Egg".
Re:You could cut interest rates to -100 (Score:4, Insightful)
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So we pay the other way, through inflation.
That is a fact. Keynes said this:
There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
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She's not wrong. The top 25 egg producers in the country [wattagnet.com]. You will note CalMaine has the top two spots on the list. Also, most of these producers only operate in select areas. Only CalMaine, the largest of the group, operates in more than one region.
So tell us, what happens to prices when you have only one major producer in an area?
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Do you really think that an egg producer operating in only one "region" means only one egg producer competes in that region? You're comparing two very different things! Even #25 on that list is shown as selling eggs in 11 states, and #10 is "the largest supplier of processed eggs in the world". Do you think that #3 Hillandale's three dispersed production areas means they only compete in one region?
Count how many of those producers are in Iowa (or Indiana or Pennsylvania or Minnesota) and figure out wheth
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Well, you need to go farther up the chain and look at the CPG (consumer packaged goods) producers. Even then, profit margin on its own is not a clear indicator as many CPG companies will do things like dividend payouts and capital expenditures to make their PM appear small in the quarter or so before an election depending upon how that want to impact that election.
No one debates whether or not COVID temporarily impacted costs across the supply chain. The issue is that supply chain has largely recovered, but
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This is the price gouging that people...often Dems...refer to, and no, it's not a lie.
It is a lie. The numbers simply don't back you up. [stlouisfed.org] Producer prices have risen drastically and those costs get passed to consumers. Inflation is always due to government expansion of the money supply, in fact that was the definition of inflation before the concerted effort by government and media to try and hide the connection between consumer price increases and monetary inflation by simply calling it "inflation". Doing so obscures the connection to government deficit spending, which is the last place they
Kroger's profits are up around $10b (Score:3, Informative)
Their margins are way, way up. This is just a fact. Robert Reich has good numbers on it if you'd care to leave your Fox News bubble.
Also, the Austrian Institute? Seriously? Might as well just linked to Project 2025 and got it over with...
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Their margins are way, way up.
I just linked to a graph of their margins [ycharts.com], genius. Try lying about something less transparent. The margins range from 0.92% to 2.7%.
This is just a fact.
Lie. Did you think nobody had any access to the data?
Robert Reich has good
Lying, water-carrying, and crawfishing skills.
if you'd care to leave your Fox News bubble.
I don't like nor do I watch Fox news. I don't have a TV and I never go there. Nice try, I guess?
Also, the Austrian Institute? Seriously?
Facts are facts. Truth is truth. It doesn't matter where it comes from, either provide counter-arguments and more apropos facts or shut the fuck up.
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It doesn't matter where it comes from
That is the dumbest shit I've heard all day
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That is the dumbest shit I've heard all day
You think facts change depending on who speaks or write them? You're the dumbest asshole in the entire thread. Dude, WTF?
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Yeah, buddy. It is called "spin"... taking a fact and making a statement that isn't entirely false, but it may as well be with its deliberately dishonest framing
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The logical fallacy where you attack the source of the argument rather than addressing the argument itself is called an ad hominem fallacy. Specifically, an ad hominem fallacy occurs when someone refutes or dismisses another person's argument by attacking the person's character, motive, or other attributes, instead of engaging with the substance of the argument. There are several types of ad hominem fallacies, including: Ad hominem abusive: Attacking the character of the person making the argument. Ad hominem circumstantial: Suggesting that the opponent's circumstances or situation influence their argument, thereby discrediting it. Ad hominem tu quoque: Dismissing someone's argument because they don't "practice what they preach" or are guilty of the same thing they criticize. All of these are fallacies because they divert attention away from the argument's content, focusing instead on irrelevant aspects of the person making the argument.
You can link to all the graphs you want (Score:2, Insightful)
What I don't understand is why you're going out of your way to protect mega corporations on slashdot. That's the saying goes weird hill to die on but at least you're dead.
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The 10 billion dollar increase in profits says all you need to know.
I get that Communism is the politics of jealously and you hate profits, but you're scale is all fucked up. $10 B isn't jack shit to a $26,800 B economy. That's not even a rounding error.
You can link to all the graphs you want
Yeah, I absolutely will feel free to link to graphs with relevant, facts, thanks for your permission.
The fact that you have to fiddle with numbers to try and make your case
Wow, I didn't know I was so powerful I could go fiddle with the St Louis Fed's numbers. If i'd have known I was this powerful, I'd have done it earlier! Here I was just thinking that you might want to be informed or have som
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$10 B isn't jack shit
It's plenty to the people who paid into it, via their grocery bill. Or is the grocery bill not an issue now?
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Re: You could cut interest rates to -100 (Score:2)
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Re: You could cut interest rates to -100 (Score:2)
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You cannot blame the producers. Their costs are up and margins are down. Blaming "middlemen" is dubious with one exampl
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Re: You could cut interest rates to -100 (Score:2)
We used to talk about monetary inflation as if it was the only thing that increases prices. But now we talk about price inflation. Monetary inflation is one cause of that, but increases in profit are the single largest cause, accounting for over 50% of price inflation.
You are still talking about monetary inflation as if it were what mattered most, but THAT is the lie. Corporate profits are of more consequence to the workers, to whom the wealth never actually trickles down.
The confusing part of all of this i
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We used to talk about monetary inflation as if it was the only thing that increases prices. But now we talk about price inflation.
You might have, but real economists take all the factors into consideration. The impact of deficit spending and money printing is monetary inflation. Monetary inflation leads to increases in consumer prices. The general term "inflation" used today is used to incorrectly reference price-inflation. The dictionary actually changed the definition (in the late 1990's or early 2k's I think). This is because government friendly economists don't want normal people to make the connection between deficit spending and
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you are an absolute fucking moron.
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But hey, it will be another excuse for companies to raise prices by claiming they have to keep up with inflation.
This is not how this works. You need somebody to be raising prices in order for inflation to exist. Then and only then does it become kind of self-perpetuating - somebody raised the cost of your inputs, so you have to raise the cost of your output to keep up.
Re:Let inflation reign (Score:5, Insightful)
But hey, it will be another excuse for companies to raise prices by claiming they have to keep up with inflation.
This is not how this works. You need somebody to be raising prices in order for inflation to exist. Then and only then does it become kind of self-perpetuating - somebody raised the cost of your inputs, so you have to raise the cost of your output to keep up.
You're thinking in terms of how it should work. But today? I guarantee you companies will say they need to raise prices to "keep ahead" of an imaginary inflation that wasn't going to be coming, but will because companies are now on the "squeeze the public until they can't buy anymore" path. It doesn't matter if the narrative fits reality, they'll MAKE reality fit the narrative. Because they can. And there ain't a damn soul in the regulatory section of our government that gives a good god damn about it.
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But today? I guarantee you companies will say they need to raise prices to "keep ahead" of an imaginary inflation
Sorry, but I simply don't understand this line of reasoning. It obviously isn't simple -- monopolies are a thing, difficult-to-enter industries are a thing.
But the idea that companies were too shy (or had no good excuse) to raise prices until a few years ago really baffles me. They raise prices as much as they can. The only thing that is stopping them is anti-monopoly/anti-price-fixing regulation and market competition. I can't imagine how anything else (e.g., anti-price-gouging rules) would possibly lowe
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I'm pretty sure all the really large businesses have systems in place where they test price increases all the time, and then they stick with any that don't impact sales. I would be shocked if Walmart and Target weren't testing price increases on different products in different stores based on some algorithms to gather data on whether keeping higher prices made good business sense. Inflation happens when something changes and the data says they can get away with the higher prices.
And once one does it, the o
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Rates are high right now, I would hope they're doing short term over long term.
Re:Let inflation reign (Score:5, Insightful)
Your comment suggests you're young, but you're ID suggests you're old. Today's interest rates of around 3.5-4% (resulting in mortgage rates around 6-7%) are not by any means high. They are high relative to the stupidly low ~0% we had for far too long, but they are nothing compared to the 10-15% (resulting in mortgage rates around 18%) in the late 70s and early 80s.
I'm probably most annoyed because I'm risk averse and like the 4.5% I'm getting in my savings account right now, and will need to put that into more risky accounts instead.
Re: Let inflation reign (Score:2)
We got used to a very unhealthy norm. How can anyone justify lending at 3% or less with long term returns on virtually any asset or equity at twice that is beyond me. I get it for very short periods as a shot in the economic arm out of a recession, but ten years of it warped things so badly it'll take a generation to sort out.
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We are at rock and a hard place. There is simply too much debt in the system. The rates in the 1970s/80s could never happen today, today's rate is reasonable historically, but maybe not at this moment.
First, I can't believe the Fed kept the rate at zero for so long, it should have been in the 1-2% range a lot of that time. This allowed debt to rise A LOT and killed traditional savings (as you mentioned). 6 years at zero was stupid:
https://fred.stlouisfed.org/se... [stlouisfed.org]
Lower interest rates will make life easi
The economy's different now (Score:2)
I'm sick of hearing comparisons to an economy we haven't had in 30 years. Times change. People seem to prefer pretending they didn't. That's causing all sorts of problems whatever your
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“Rising prices” and “Inflation” are not the same thing. In a free market economy, prices rise for two reasons, 1. An increase in the supply of money that outpaces the growth of the economy (printing money too rapidly). This is true inflation, and 2. Supply and Demand (S&D) rebalances. They are two different things and combing the two together obfuscates underlying economic cause and effect that are best viewed and addressed separately - unless one wishes to deliberately muddy
Crap.... (Score:5, Interesting)
I don't get it...why is 6-7% or so interest bad?
I mean, in the 70's-80's...home loans were all in the what...12-14% range and we had plenty of home sale, construction, etc...the economy was just fine with higher interest rates back then for the most part.
Obviously I have no economic "smarts"...but I can't understand why we have to try to plow the interest rate as close to zero again as possible.....
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I mean, in the 70's-80's...home loans were all in the what...12-14% range and we had plenty of home sale, construction, etc...the economy was just fine with higher interest rates back then for the most part.
o.O
Um.. no. The economy was not "just fine" back then. I was 10 in 1980 and still remember the huge gas lines, the amount of grief and stress that having to put a car repair on loan created for my aunt, etc etc. In years with lower interests and less inflation, she wouldn't have had to get that loan.
Why do people insist on normalizing higher interest rates? To make the current administration look "better?"
Nah. Not buying it. High interest sucks for consumers. I need a new roof, and the loan rates are
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Sorry. Bad analysis. The gaslines had nothing to due with interest rates. Expensive car repairs are expensive, but not because of interest rates. Get real; your family needed the loan. The real issue with interest rates is balance: interest on (our) savings/investments versus interest on loans.
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Did you also forget the 70's / early 80's had soul-crushing inflation?
Yeah, you forgot that.
The money my aunt had was sufficient in 1974 BUT NOT IN 1980.
What part of that is so difficult to understand?
Couple the inflation with high interest rates, and you crush people.
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I mean, in the 70's-80's...home loans were all in the what...12-14% range and we had plenty of home sale, construction, etc...the economy was just fine with higher interest rates back then for the most part.
o.O
Um.. no. The economy was not "just fine" back then. I was 10 in 1980 and still remember the huge gas lines, the amount of grief and stress that having to put a car repair on loan created for my aunt, etc etc. In years with lower interests and less inflation, she wouldn't have had to get that loan.
Why do people insist on normalizing higher interest rates? To make the current administration look "better?"
Nah. Not buying it. High interest sucks for consumers. I need a new roof, and the loan rates are outrageous. I have a 10 year old car, and I'm holding on to it because the car loan rates are horrible, and on top of that, I loathe the "modern" car with most functions controlled by touch screens instead of actual knobs and switches.
One take on high interest rates being normalized is that we made credit WAAAAAAAAAAAAAAY too easy to get for a long enough period of time that it caused danger for everyone involved. See the 2008 crash as an example of where that could lead. And in that case did. Unfortunately, punishing the entirety of the country for the mistakes of "too available credit" of the past seems to be the reaction we've had, rather than sensible loan practices and decent financial education for the public and letting things set
Re:Crap.... (Score:4, Insightful)
Those negative things you remember are are largely due to the horrible policies of the Carter administration - gas rationing ("price gouging safety measures"). Austerity is not a good thing.
And yes, the new cars are shit. They are designed with the financial mindset of the past 30 years: if something breaks, we want customers to just buy something new. We can not afford that anymore - they've priced their products out of what is achievable. As a result, you see 20-30 year old vehicles in good working order going for more than they did new (without adjusting for inflation), and often as much as vehicles 10-15 years newer. I'd say the "enshitification" cutoff for most vehicles was around 2010. There's just too many excessively priced repairs needed on anything newer when something goes wrong. "We've got to reprogram everything" is usually what gets you.
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OPEC had nothing to do with US gas rationing. Apparently you're unaware that gas rationing was decided upon as the solution to increased prices - instead of allowing 'price gouging' and letting the market solve the problem.
Instead of allowing the market to adapt, they opted for feel-good 'green' efforts to reduce consumption.
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I was 10 in 1980 and still remember the huge gas lines,
As someone who was a young adult at that time, I suspect what you're actually remembering is the gas lines caused by the 1979 oil crisis [wikipedia.org] which was driven in part by the Iranian revolution and in part by OPEC taking advantage of that and playing games with oil supplies. Earlier (although too early for you to remember), there were also huge gas lines caused by the 1973 OPEC oil embargo [wikipedia.org]. These specific issues weren't because of high interest rates, they were because of political instability in the Middle East
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No, wrong decade.
The US energy "crisis", with gas lines, etc was in the early 70's....like '73 or so.
There was a little hit around '79 with the Iranian crisis...but that didn't last long.
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That 1980 time....high school for me, working as a bus boy....paying for my own gas in my car.
It didn't hit me and I saw NO lines at any gas station, like there had been in the early 70's....
There was no rationing, no line, and the prices didn't mess with anyone...I lived
Re:Crap.... (Score:5, Insightful)
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I won't invest in any project that doesn't give me a significantly higher than 10% annual rate of return on that expenditure
Sounds like a good plan to me, when people are hoping to earn a few percent, most of it will be crap that has no value to anyone
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I can't understand why we have to try to plow the interest rate as close to zero again as possible.....
Right now? Because the Democrats dont' want to lose the election. They want a drop in interest rates to juice the stock market and lower mortgage rates.
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for the love of all that is holy we need to get adults back into a civics 101 class because this type of shits reveals a complete brain rotted idea of how the fed and the government as a whole actually operates
who appointed jerome powell, which senate confirmed him and why is the fed chair not an elected official and is designed to be insulated from political machinations
You're not really getting anything out of it (Score:2)
What's more you could've made those rates in a strong, healthy stock market if interest rates were lowered. So you're not really gaining anything except in increased risk of layoffs.
The 70s and 80s were a protracted period of recessions. The only thing keeping home prices down was massive government infrastructure spending. The Democrats in particular push
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Dammit...it's actually been VERY NICE to be able to actually put money into a savings account and actually earn some interest!!!!
I don't get it...why is 6-7% or so interest bad?
Because actual inflation is higher than that "savings account" interest, by a significant amount.
but I can't understand why we have to try to plow the interest rate as close to zero again as possible.....
Because the interest rate has been 2-5% for several decades. The entire face of business changed, and even hiring was/is dependent
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Dammit...it's actually been VERY NICE to be able to actually put money into a savings account and actually earn some interest!!!!
I don't get it...why is 6-7% or so interest bad?
I mean, in the 70's-80's...home loans were all in the what...12-14% range and we had plenty of home sale, construction, etc...the economy was just fine with higher interest rates back then for the most part.
Obviously I have no economic "smarts"...but I can't understand why we have to try to plow the interest rate as close to zero again as possible.....
Imagine if you could have 100% interest rate or even 1000%. You money would 10x every year. That would so good.
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You cannot separate the economy and job situations from US monetary policy. They are important variables in a complex formula.
I agree that it is old tripe of hyper partisan politics designed to favor the donors over the voters. We need to get big money out of politics.
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And the sad thing is Joe Biden had an opportunity to replace Powell but didn't have the votes in the Senate. Two of the Democratic senators were basically Republicans.
They're self-important, ego-obsessed assholes, not Republicans. Granted, I can see why you got confused. Those traits do tend to show up a lot in Republicans in the senate.
When did slashdot become.. (Score:2)
... news for economists, stuff thats boring?
Trying to offset bad news of revised job numbers (Score:5, Informative)
This comes days after the BLS says new jobs created dropped by 818k.
Re:Trying to offset bad news of revised job number (Score:5, Interesting)
This comes days after the BLS says new jobs created dropped by 818k.
Rate cuts. Just in time for the election. Hmmm.
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Yep.
My suspicion is that the job creation drop was manufactured specifically to spur on a rate cut. The real jobs numbers were always horrible.
Re: Trying to offset bad news of revised job numbe (Score:2)
You're overthinking a simple problem. Forecasting is hard to the point of being close to fortune telling, and the jobs numbers are very much "forecasting" even though they're in the past. It takes months to firm them up with real data. In times of volatility all of this is little more than educated guesses, and government agencies rely on (or hide behind, depending on your perspecitve) established methodology. Even when they know better, if you follow the playbook you can't be accused of putting a thumb on
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Just for a little perspective, they weren't able to cut it during the last election, because they were already at 0% and had been at zero for the entirety of the Trump administration.
Hmm.
It's way too late to matter (Score:2)
By the time the macroeconomic effects of this hit the election will have been long since over. The only thing that'll do is most likely Wall Street won't crash right before the election but that doesn't have any impact on the run of the mill voter. Sure a Wall Street crash will cause mass layoffs but that takes a few months
That's nowhere's near the layoffs Powell wanted (Score:2)
This is just the cuts we should've had months ago. I mentioned this elsewhere but it's extremely likely we didn't have those cuts due to partisan B.S..
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This comes days after the BLS says new jobs created dropped by 818k.
That sudden and unexpected rate change by the central bank in Japan did not help the markets either.
The ripple effect of it was felt far & wide in the markets. And all in an effort to prop up the flailing (failing?) Yen in global currency markets.
Of course (Score:4, Funny)
....it's complete coincidence that the federal election is what, about 10 weeks away?
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With lowe
Gov lies (Score:2)
Recently the government rolled back their jobs reports because it was exaggerated by over 800k jobs since December of last year. I'm thinking we are still in a recession and the government is trying to gaslight the public into believing differently. The government can fix inflation by using congresses ability to control prices. You should be asking why Congress isn't stepping in?
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Late again (Score:2)
The Fed was late to raise rates, failing to do so until inflation was out of control.
Now they're late to cut rates, failing to do so until the economy has begun to sink under the weight of the high rates.
The economics of the need for rate cuts has been clear since spring, but the Fed was too nervous about jumping the gun, that they waited until it was too late.
Let's hope the economy forgives them.
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