Fucking Moron (TM): the negative interest rates edition

[timelets]

In the National Association for Business Economics October survey, 53% cited trade policy as the key downside economic risk through 2020.

On Wednesday the Fed continued trying to counter that risk by cutting the fed-funds rate for the third time this year to between 1.5% and 1.75%. With inflation at about 1.7%, this means the Fed is underwriting negative real interest rates even with the economy growing 2% and the jobless rate at an historic low of 3.5%. This is not tight policy.

https://www.wsj.com/articles/adam-smiths-revenge-11572475800

What are they going to do when the economy stops growing?

Comments

[garret_lab]

"What are they going to do when the economy stops growing?"

Основная задача -- не обвалить показатели роста экономики до отрицательных в ближайший год. Горизонт планирования в 14 месяцев или больше справедливо должен считаться администрацией свидетельством абсолютной нелояльности. Поэтому постановка вопроса нуждается в уточнении: "What are they going to do when the economy stops growing in a couple of years?". Ответ: "Радоваться, что героически удалось оттянуть этот момент за заветную дату всеобщих выборов двадцатого года".

[peristaltor]

It stopped growing, some time ago. The only growth left is in stocks and housing bought as rental investment property (and the derivatives built out of these investments). As long as the Fed keeps QE up, the banks (under the new Dodd Frank and previous Gramm Leach Bliley rules) can keep such assets as backing. Since they pay better returns, they keep buying them.

Unemployment numbers are completely skewed by a lack of those no longer eligible to draw benefits being dropped from the stats as if they were not starving and homeless. Many are. Hence, a combined "boom" in both the economy and the homeless population.