Powell's remarks once again confirm my expectation.

KnightWhoSaysNit

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They will pay lip-service to high inflation.

I only heard summaries and did not get it first hand, but the interpretation from the analysts I watch was that he sees a "softish landing" as possible, i.e., no recession, and that interest rate hikes may not need to be as aggressive, though there is still broad support for 0.5% at each upcoming meeting.

This is what we can expect, a Fed more concerned with shareholders than it is with consumers. There was a bond selloff this afternoon to pair with the remarks, raising the 10-year close to 3%.

Got that consumers? You're going to still get next to nothing on your savings. You'll pay higher interest rates as investors see higher inflation. And you still get to pay high prices.

Great for retirees. Once again getting forced into risk assets to cover inflation.
 

NJPSU

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I noticed the market had a decent sell off from its highs early in his remarks but then rebounded to close strong. They must have liked something he said in the second part of his talk.
 

KnightWhoSaysNit

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I know what they're going to do. They will inch up rates, sit and wait, and do nothing as long as inflation is coming down. The problem with that is that it allows inflation to run hot for several years, thus destroying pensions, savings, and other assets that are not inflation-adjusted. In other words, it will be more of the same.

We only hear of wages keeping pace, which is possible if inflation starts trending down slowly. They exclude fixed incomes from any comment and assume that retirees have their income tied to a COLA.

Before its over we could see pensions worth half of their previous value after just the pandemic period.
 

NJPSU

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I know what they're going to do. They will inch up rates, sit and wait, and do nothing as long as inflation is coming down. The problem with that is that it allows inflation to run hot for several years, thus destroying pensions, savings, and other assets that are not inflation-adjusted. In other words, it will be more of the same.

We only hear of wages keeping pace, which is possible if inflation starts trending down slowly. They exclude fixed incomes from any comment and assume that retirees have their income tied to a COLA.

Before its over we could see pensions worth half of their previous value after just the pandemic period.
What’s the alternative? Drastically increase rates immediately, blow up the stock market, cause a severe recession, and a major spike in unemployment. That’s not going to be too great for pensions that are already underfunded.
 

The Spin Meister

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An altered state
I know what they're going to do. They will inch up rates, sit and wait, and do nothing as long as inflation is coming down. The problem with that is that it allows inflation to run hot for several years, thus destroying pensions, savings, and other assets that are not inflation-adjusted. In other words, it will be more of the same.

We only hear of wages keeping pace, which is possible if inflation starts trending down slowly. They exclude fixed incomes from any comment and assume that retirees have their income tied to a COLA.

Before its over we could see pensions worth half of their previous value after just the pandemic period.
The government desperately needs inflation and low interest rates. Inflation means far higher tax revenue pouring in that they can use to pay off the massive debt load the country carries. They don’t care that inflated dollars have less value because they are paying the debt by dollar numbers, not dollar value.

And they need low interest rates because of that same debt. If rates go up significantly the required debt payments will become huge. Some say it could equal or exceed all the tax revenue generated by inflation, leaving little or no revenue for ongoing operations or obligations.

That’s why the Fed will not raise rates. Doing so could trigger a financial catastrophe.
 
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KnightWhoSaysNit

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What’s the alternative? Drastically increase rates immediately, blow up the stock market, cause a severe recession, and a major spike in unemployment. That’s not going to be too great for pensions that are already underfunded.

If pensions are underfunded that is a problem of mismanaging obligations. The pensioner should not be the one to suffer for that.

Second, the pensioner should not be the one to pay for the Federal Reserve mismanaging the money supply. They were either incompetent, despite all of their resources, or they lied.

Why should people on fixed incomes be made to pay for a stock market bubble? That is what Powell is doing by prolonging inflation.

A friend of mine who (like me) manages his own finances in retirement lamented almost two years ago that the Federal Reserve was making "old people" pay for the pandemic response. He was spot on.

One thing they could do is to stop taxing earnings on government debt instruments, including pensions. That would compensate for the loss somewhat. I feel this has been theft, and they want to continue the theft.

I am disgusted by this leftwing government. They don't care who they hurt. They have an agenda.
 

NJPSU

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If pensions are underfunded that is a problem of mismanaging obligations. The pensioner should not be the one to suffer for that.

Second, the pensioner should not be the one to pay for the Federal Reserve mismanaging the money supply. They were either incompetent, despite all of their resources, or they lied.

Why should people on fixed incomes be made to pay for a stock market bubble? That is what Powell is doing by prolonging inflation.

A friend of mine who (like me) manages his own finances in retirement lamented almost two years ago that the Federal Reserve was making "old people" pay for the pandemic response. He was spot on.

One thing they could do is to stop taxing earnings on government debt instruments, including pensions. That would compensate for the loss somewhat. I feel this has been theft, and they want to continue the theft.

I am disgusted by this leftwing government. They don't care who they hurt. They have an agenda.
The fact you are a pensioner without a COLA is clouding your judgment here. The Fed is correct in prioritizing the stock market over non COLA pensions. Pensions, other than social security (which has a COLA) are dinosaurs. They hardly exist anymore.

Trying to prop up the stock market benefits many more people in today’s society. Even pensions are invested in it.
 

KnightWhoSaysNit

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The fact you are a pensioner without a COLA is clouding your judgment here. The Fed is correct in prioritizing the stock market over non COLA pensions. Pensions, other than social security (which has a COLA) are dinosaurs. They hardly exist anymore.

Trying to prop up the stock market benefits many more people in today’s society. Even pensions are invested in it.

No, it isn't. The Fed had a stated mandate -- 2% inflation. Central banks had no reason to create inflation during a pandemic. That should be a deflationary event as business activity slowed. They blew it by excessive printing.

Explain why housing prices should have soared with people shut in. Truth is the Fed artificially drove down interest rates. Now it created an asset bubble on top of inflation. Idiots.
 
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KnightWhoSaysNit

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I will add here that the S&P stood at about 3400 just before the pandemic. There is absolutely no reason that stimulus should have elevated above that price. Anything creating "wealth" above that price, as business was being curtailed, was pure inflationary.

The Congress and the Fed had clear indicators of excess. And yet they took the opportunity to enrich themselves. My guess is that they were out of the market at just the right time, or positioned themselves with options in select categories that they knew they were funding with legislation.
 

Sullivan

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What’s the alternative? Drastically increase rates immediately, blow up the stock market, cause a severe recession, and a major spike in unemployment. That’s not going to be too great for pensions that are already underfunded.

The Fed exasperated the situation by being slow to increase rates, and by continuing to buy mortgage back securities.

Had they started nearly a year ago, we wouldn't see such high inflation, which would have reduced the amount that they will now to raise interest rates.
 
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JR4PSU

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What’s the alternative? Drastically increase rates immediately, blow up the stock market, cause a severe recession, and a major spike in unemployment. That’s not going to be too great for pensions that are already underfunded.
And significantly add to the deficit due to higher interest payments on the debt.
 
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KnightWhoSaysNit

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The Fed was about a year and a half too late. In August of 2020 they should have announced that they would be done with stimulus at the end of 2020. Instead, what Powell said at that time was that markets were recovering too fast.

I think they got caught up in greed and then used the pandemic as an excuse.

Being that late is an epic disaster. Bubbles create bigger problems than a lower, smoother, continuous rise.
 

JR4PSU

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The Fed was about a year and a half too late. In August of 2020 they should have announced that they would be done with stimulus at the end of 2020. Instead, what Powell said at that time was that markets were recovering too fast.

I think they got caught up in greed and then used the pandemic as an excuse.

Being that late is an epic disaster. Bubbles create bigger problems than a lower, smoother, continuous rise.
This could have been largely avoided had Biden not taken a draconian approach to fossil fuel production in the US on his first day in office. A significant portion of the inflation is due to the rise in energy costs.

Yeah, he did that!
 
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