FED - BETWEEN A ROCK AND A HARD PLACE. What were your expectations?
INTRODUCTION
Recently, many eyes around the world were directed towards the FED meeting and the level of fear and uncertainty has been really high lately.
However, when I realised that nothing has been really announced ... part of me didn't even feel surprised. I felt like they did exactly what I would do if I were in their own shoes: simply nothing. Nothing more, than just "talking". Empty words, one could say.
Today I would like to share with all of you my thought process and I hope to hear from you as well. So I could learn other points of view on that particular topic, and perhaps revise my own opinion in discussed matter.
REDUCING BALANCE SHEETS?
First of all, their idea of reducing the balance sheet is making me quite confused. For several weeks now, they have been planning to reduce their balance sheet, but at the same time they ONLY plan to slow down printing new money.
Not to stop it, but to slow it down.
Can anyone let me know HOW IT'S EVEN POSSIBLE? To achieve both such opposite goals.
WHEN TO EXPECT HIGHER INTEREST RATES?
Recent lack of actions could be expected by many investors and I belong to such a group. In my personal opinion, there have been too many eyes directed at the FED. More than anytime before within recent years, and I'm sure they didn't like the attention. Especially since this time this attention has also been coming from mass media.
I would rather expect interest rates to be hiked "QUIETLY".
Let's wait for some other news which will grab everyone's attention. Be it conflict between China and Taiwan, or "invasion" Russia on Ukraine or anything else which will take people's attention away from topics related to inflation and FED.
JOE BIDEN says: "INFLATION IS A GREAT ASSET"
Another thing worth mentioning is the fact that the current US administration (under Joe Biden) seems to rely greatly on public spending. It does look like they are addicted to money printing.
Joe Biden clearly doesn't understand the basics of economics and when recently he was asked about inflation, he replied "That's a great asset, more inflation".
Shocking statement, isn't it?
Let's face it. President Joe Biden is already quite old and so often he doesn't even look like he is "connected" with the world around him.
I don't really think he gave much thought to the idea of being re-elected and all he care is to leave some sort of LEGACY behind. He clearly don't want to have large social unrest on his hands. And we need to take this into consideration as well.
MY PERSONAL VIEW: BETWEEN ROCK AND A HARD PLACE
FED is clearly between a rock and a hard place and they surely do not enjoy all the attention they are receiving.
I wouldn't be surprised if soon they would try to address the problem of inflation with stricter actions. And they will do it most likely once they will feel even more pressure. Timing it well and waiting until mass media will be occupied with other topics. Not related to FED, US administration and money printing. When all eyes will look elsewhere.
However, even if they will do it -> then it will most likely be short-lived.
Inflation at this stage cannot be stopped any more, not without hiking interest rates heavily. And that would be a huge problem for the government, which would have to pay billions just to serve their debt alone. Crashing all dreams of enormous public spending by current US administration.
Important detail often ignored:
At the same time higher interest rates means much higher loans and mortgages, which may be a nail to the coffin and it will most likely push people into the streets.
So social unrest is pretty much guaranteed at this stage, and I'm not sure if they would be willing to also witness WALL STREET and stock markets going through difficult times. After all: it is one thing to mess with masses of regular people, and it's a completely different challenge to upset wealthy billionaires and upset your own president.
SHARE YOUR VIEW WITH ME
What do you think? Is there any way out of this situation? Can we kick the can down the road a bit longer before social unrest will explode?
How do you look at FED actions in short and long term? Did you believe that interest rates may be increased in any MEANINGFUL WAY sometime in the future? With all consequences that it may cause?
Share your thoughts with me. I appreciate all the valuable comments.
Yours, @crypto.piotr
@project.hope founder
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Hello @crypto.piotr, Currently important things are happening that we must take into account and in your post you have shown a good summary.
I think the consequences point to a total collapse of the world economy driven only in part by rising interest rates, the fact that people who "move" on the axis of the minor economy and the local economy lose their homes , their jobs and their businesses is the same as saying that this majority will be witnessing a period of famine, in the same sense the stock market would be on the verge of an absolute collapse and no business model will be feasible, who would dare to invest or maintain the operations of their companies? How many jobs will be lost? How many people with mortgages will lose their houses, cars or how they will pay their loans?
What worries me the most is, if the production lines stop, how many of us will survive?
I no longer want to continue imagining this possible chaos.
:(
Appreciate your comment @tocho2
Perhaps you should step back and look at things without emotions?
Yours, Piotr
From the inception of decentralized currency the FED have undergone a psychological unrest looking for means to discourage public from adopting the new technology.
Looking at how the world economy is heading not sure how inflation can be tackled completely as some prominent elite deem it as good asset to the economy.
The Fed have actually been a major hindrance when it comes to blockchain wide adoption and at moment a lot of individuals are patiently waiting for the fed to take their next move which might indirectly affect the crypto space.
My take on inflation at the moment is it has become a world problem gradually expending across the continent i hope more tactical means of handling the problem will be unvail sooner.
Hi @mccoy02
Thanks for taking the time to read my publications share your thoughts with all of us.
How crazy is that? Right?
I only can imagine, that Joe Biden sees inflation as a way to devalue US goverment debt. And futher money printing is required to cover extensive public spending. Which he is great proponent.
Wouldn't you agree?
Cheers, Piotr
Covering extensive spending that will lead to more inflation which i consider bad for the economy as well.
Greetings friend, certainly the last two presidents of the United States have taken uncertain economic measures making inflation in that country one of the highest in the last decade, to this is added the already archaic and deteriorated world economy which is suffering its debacle.
The FED and the United States are focusing their attention on their economic problems, when really the relevant issue is the outcome of the possible conflict with Ukraine.
Hi @carlir
My guess is that this conflict will not escalate. It's a way for Russia to put political pressure on european union.
After all, Russia already attacked Ukraine once (within recent years) and didn't achieve much. It would be very expensive for them to go into war. Especially without many allies and economy struggling.
That's my own little opinion :)
Cheers, Piotr
Greetings @crypto.piotr ❤️💕
This aspect is also getting me confused just the same way you are. Reducing the balance sheet and the plan to print out new money doesn't really sounds correlating to me but I think the government might have their plans to make this happen. Let's just keep watching what happens in this aspect.
I really can't say much about this for now because are still some certain conversations and information which are hidden or unknown to most of us. This may actually be a political game.
Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead 💕❤️💕
Appreciate your comment @hardaeborla
It clearly seem that we're both on the same page here.
And we're both confused hehe :)
hello @crypto.piotr,
i think that the way out that the united states will take to face its inflation problem is war, russia knows that the united states economy is in trouble and can bet on a rupture of the american economy, something similar to the strategy that the united states took against the ussr. a war implies the activation of industries and social union, that's why I think a U.S. war with Russia is the way out that both will take.
Hi @trabajosdelsiglo
Do you really believe that US would go for war with Russia? I think it's very unlikely to happen.
Even if US would decide to join (why would they?) - they surely would wait until Russia already would be bleeding out while trying to conquer Ukraine.
My personal guess is that this conflict will NOT escalate. I see it as a way for Russia to put political pressure on european union.
After all, Russia already attacked Ukraine once (within recent years) and didn't achieve much. It would be very expensive for them to go into war. Especially without many allies and economy struggling.
Cheers, Piotr
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I agree with you @crypto.piotr. This uncertainty is increasing day by day.
Hello @crypto.piotr
In all of this, more ala the serious economic consequences that are post-pandemic, I think the effect that social networks and other media are having are becoming more and more evident.
Any announcement or "possible announcement" causes many people to be influenced more by the rumor than by what has actually happened.
I do not believe that the United States wants to generate global chaos, much less in its own territory, although those who have economic power think very differently from us.
If it is in their interest to generate that chaos, they will make the announcement they have to make, regardless of the consequences.
It seems to me totally absurd that the crypto market moves on a par with the traditional market, such as the stock market, which we know are totally centralized, but, I understand that much of the capital invested is institutional capital.
I do not know what to expect specifically from the FED, however, the market is affected a lot by what it says, and even much more by what it does not clearly say, because this is precisely what gives rise to the rumor.
You nailed it @josevas217
It looks like they are testing out how far can they influence the markets without really doing much.
haahaha tell me about it. They surely do not see world the way regular Joe does.
However, I don't think generating chaos is anyones agenda. It's more like FED knows that they need to do something to combat inflation, but they do not want to do it while so much attention is directed towards them.
Yours, Piotr
First of all I agree with your. Now regarding the topic inflation will be increasing day by day we cannot reduce inflation their are any reason for the same. Like crude price , stock market , unemployment etc.
All this wi take place to increase the inflation government need to control it by making good measure otherwise suitation like Kazakishstan will happen.