Article originally appeared on www.zerohedge.com.
Authored by Jeffrey Tucker via The Epoch Times,
By dropping rates dramatically only a month and a half before an election, the Fed is playing with fire. The election, by all visuals, would seem to pit the establishment against an insurgent populist movement. Regardless of the countercyclical motives, it’s a move that has been widely seen as deeply political. And that invites resentment and retribution.
Let’s examine the case for the rate cut. Rates are not tremendously high in real terms. The inflation fight of the last two years seems to have drawn down the rate of price increases, though the battle is far from over. But now the Fed believes it has another problem with which to deal, namely weakness in the labor market.
To get ahead of a possible impending recession compels the Fed to engage in another round of easing. That’s the thinking in any …
| View full article |
