Powell Wants to Create Some Mystery Around Fed Meetings
- As rates approach the true neutral rate which is expected to be 2.8% to 3%, policy makers need to more carefully assess the current and expected state of the economy before blindly pushing rates higher.
- That doesn’t mean gradual rate increases will end, only that the Fed will rely less on forward guidance.
- By 2019 the guidance will shift away from an implicit expectation of a 25-basis-point boost each quarter and officials will increasingly emphasise the role of incoming data when setting policy.
- A slower or faster pace of hikes, an extended pause, or even a rate cut are all possibilities at this point.
- Powell provided a clue to which data central bankers will be sifting through including job growth closer to 100,000 per month, a figure they expect will stabilise the unemployment rate.
- The Fed is not likely to believe they have reached a neutral policy stance as long as the labour market is sufficiently strong to place ongoing downward pressure on unemployment.
How we lost America to greed and envy
- US policy had four attractive features: it had appealing core values; it was loyal to allies who shared those values; it believed in open and competitive markets; and it underpinned those markets with institutionalised rules.
- Yet today the US president appears hostile to core American values of democracy, freedom and the rule of law; he feels no loyalty to allies; he rejects open markets; and he despises international institutions.
- The rise of China and the unanticipated impact of globalisation have profoundly affected the US view of itself and its global role and no longer sees itself as so dominant and the world as so friendly.
- The striking feature of the US economy is that, despite its unique virtues, it has recently served the majority of its people so ill.
- The distribution of income is exceptionally unequal.
- Labour force participation rates of prime-aged adults are exceptionally low.
- Real median household disposable incomes are the same as they were two decades ago, while mean incomes are much higher.
- Uniquely, mortality rates of middle-aged white (non-Hispanic) adults have risen since 2000 in the US.
- In 2016, there were just 5,000 murders in the EU, a rate of one per 100,000 people (including terrorist attacks). There were 17,250 murders in the US, a rate five times greater. Yet Trump always tweets his shock at high-profile terrorist outrage in the EU.
- The propaganda of trickle down economics has led to splitting the less well-off on cultural and racial lines, ruthless gerrymandering and outright voter suppression.
- President Trump gives the rich what they desire, while offering the nationalism and protectionism wanted by the Republican base even though protectionism won’t do them any good.
- The old America will not return until someone finds a more politically successful way of meeting the needs and anxieties of ordinary people.
Foreign Money Diverts From U.S. as Trump Hardens Trade Stance
- The U.S. reputation for stability had long underpinned its status as the most popular place for investors to put their money.
- The administration turned to the previously rarely deployed section 232 national security provision of the 1962 Trade Expansion Act to impose tariffs on steel and aluminium imports, and now uses it to threaten crippling duties on car imports.
- Trump is also turning to the Committee on Foreign Investment in the U.S., or CFIUS, as a way to limit foreign investment in sensitive technologies.
- Foreign direct investment in U.S. businesses, factories and subsidiaries plunged in 2017 by 32% and is falling again this year.
- New Chinese deals in North America in the first half of this year dropped to a nine-year low of $2.5 billion, compared with $24 billion in the same period during 2017
- Even countries in Western Europe, who as American allies viewed the U.S. as safe ground, are worried about the prospect that their deals may be rejected.
- In the short term, investors may look to invest in other economies where the political outlook is more easily predicted.
- Federal Reserve Chairman Jerome Powell also has voiced concern on the trade climate’s impact on investment. He noted that tariffs are leading companies to delay capital spending decisions.
Can truth survive this president?
- The disregard for honesty in the Trump era, with its ever-changing menu of “alternative facts,” is eliciting new research and polemics from philosophers, literary critics, political analysts and social scientists.
- There is a pattern and logic behind the dishonesty of Trump and his surrogates; however, it’s less multidimensional chess than the simple subordination of reality to political and personal ambition.
- When truth becomes malleable and contestable regardless of evidence, a mere tussle of manufactured narratives, it becomes less about conveying facts than about picking sides, particularly in politics.
- The goal of propaganda is not to convince someone that you are right, but to demonstrate that you have authority over the truth itself. When a political leader is really powerful, he or she can defy reality.
- President Trump has made over 3,251 false or misleading claims from his first day in office through this May.
- If you track some of Trump’s most notorious lies, you’ll recognise the steps;
- Step 1: Stake a claim on a fringe issue that few people want to touch.
- Step 2: Advance and deny — that is, put the falsehood into circulation, but don’t own it. (This is Trump’s “people are saying” phase.)
- Step 3: Create suspense by promising new evidence or revelations, even if they never appear.
- Step 4: discredit the opponent with attacks on motive or character.
- Step 5: just win — Trump declares victory, no matter the circumstances.
- Finally, Suggest that the press cannot be trusted to deliver the truth on the matter, thus redefining the lie as “controversial” and empowering people to privilege beliefs that fit their personal biases.
- Facts and data have become more important in most other fields, with political and civil discourse being striking exceptions.
- Ideologues don’t just disregard facts they disagree with but willingly embrace any information, however dubious, that fits their agenda.
- Death of truth. Gaslighting. Truth decay. Whatever you call it, the devaluing of truth — and, by extension, of expertise and the pursuit of knowledge — should pose enough of a concern on its own without worrying about the collateral damage.