Ep. 96A – Is The Fed Clueless?

The Kapital News
The Kapital News
Ep. 96A - Is The Fed Clueless?

It’s the talk of the town that the Federal Reserve is all but 100% certain to be lowering interest rates at the end of July. However, the Fed is still engaged in quantitative tightening, QT. According to some of their own studies and analysis by outside parties, QT also has the effect of increasing interest rates. So will the Fed also call an early quits to QT in July? If not, then are the effects of a rate cut coupled with a continuation of QT a neutral or “non-move” by the Fed? It appears that the Fed doesn’t know or at least it hasn’t said much about this issue. At current expectations, the Fed is to wind down QT in September – removing up to $50 billion per month from their balance sheet. They have been doing so for well over a year and so while the official Fed Funds Rate is range bound between 2.25 – 2.50%, with the add-on effects of QT, we’re more likely in an actual range of 3.75 – 4.25%. Following the analysis by The Kapital News, it takes a lower Fed Funds Rate to burst/prick and ever-increasing bubble. Therefore, either scenario, the implicit higher rate or the official rate has already done its damage. It’s now simply a matter of time before the full effects are felt. Also be mindful that the true negative effects came from low interest rates and QE. We will soon be witnessing this global debt coming home to roost and a 25 or even 50 basis point drop, is not going to cut it. Stay tuned.

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