When Does It End?
A reader asked “When Does It End?” in response to Real Interest Rates Are More Negative Now Than In the 2004-2007 Housing Boom.
https://twitter.com/randomtalkwalk/status/1408147705973645322
“So the question is when does it end? The Fed has to raise interest rates for asset deflation to start.”
Attitudes Baby! Attitudes!
It is very important to understand the role of attitudes.
QE is about maintaining attitudes. Taper Fed talk is really about attitudes.
It’s all about attitudes.
— Mike “Mish” Shedlock (@MishGEA) June 24, 2021
Recall that in 2006 people stood in lines for the right to enter a lottery to buy a condo to no lines 1 week later. What changed? Attitudes!
Real or Fake?
Various Fed governors differing opinions could be real or fake. It’s impossible to know what they really think.
Do note that most of those presidents seeing action sooner rather than later are non-voting Fed members now (voting rotates except for the Chair, Vice-Chair, and the New York Fed President).
The Vice-Chair has been silent, but Chair Jerome Powell and New York Fed President say “Fed’s Rate Liftoff Still Way Off in the Future“.
Talk is Cheap
Talk is cheap, especially when you don’t even get a vote.
Non-voting Fed members are mentally preparing you for hikes without having to actually go on record voting for them.
Meanwhile, two of the three votes that matter most are telling us hikes are far off. Is the third silent on purpose to wave the correct flag later?
You can believe this is happenstance or not, but the impact is all about attitudes, mainly adjusting yours!
Regardless, the Fed can only influence attitudes, it cannot control them. If the masses decide for any reason to dump stocks, they will. Meanwhile, attempts to prevent that are what it’s all about.
Mish
