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Anonymous ID: ed78df April 11, 2019, 5:53 p.m. No.6144301   🗄️.is 🔗kun

Lacy Hunt: "The Fatal Similarities To The Past Are Remarkable"

(a quick read but worth your time- The way the Fed

The parallels to the past are remarkable, but there appears to be one fatal similarity – the Fed appears to have a high sensitivity to coincident or contemporaneous indicators of economic activity, however the economic variables (i.e. money and interest rates) over which they have influence are slow-moving and have enormous lags.

 

In the most recent episode, in the last half of 2018, the Federal Reserve raised rates two times, by a total of 50 basis points, in reaction to the strong mid-year GDP numbers. These actions were done despite the fact that the results of their previous rate hikes and monetary deceleration were beginning to show their impact of actually slowing economic growth.

 

The M2 (money) growth rate was half of what it was two years earlier, signs of diminished liquidity were appearing and there had been a multi-quarter deterioration in the interest rate sensitive sectors of autos, housing and capital spending.

Presently, the Treasury market, by establishing its rate inversion, is suggesting that the Fed’s present interest rate policy is nearly 50 basis points too high and getting wider by the day. A quick reversal could reverse the slide in economic growth, but the lags are long.

 

It appears that history is being repeated – too tight for too long, slower growth, lower rates."

https://www.zerohedge.com/news/2019-04-11/lacy-hunt-fatal-similarities-past-are-remarkable

 

Please see this on a quick primer on how the money supply statistics are determined.

(please keep in mind that many changes were made just prior to the '08 crash and the FRB does not use these in the same way most articles suggest)

Money Supply

What is Money Supply?

 

The money supply is the entire stock of currency and other liquid instruments circulating in a country's economy as of a particular time. The money supply can include cash, coins and balances held in checking and savings accounts. Economists analyze the money supply and develop policies revolving around it through controlling interest rates and increasing or decreasing the amount of money flowing in the economy.

 

Breaking Down Money Supply

 

The money supply reflects the different types of liquidity each type of money has in the economy. It is broken up into different categories of liquidity or spendability, as we will discuss below in more depth.

https://www.investopedia.com/terms/m/moneysupply.asp

 

Encourage you to look up the specific changes to these three indicators leading up to and after the '08 crash. Do not wish to cloud what is being presented here.