Laissez-faire: The Best Fed Policy Is To Stand Pat - News and Current Events | futures io social day trading
futures io futures trading


Laissez-faire: The Best Fed Policy Is To Stand Pat
Updated: Views / Replies:333 / 0
Created: by Quick Summary Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

Laissez-faire: The Best Fed Policy Is To Stand Pat

  #1 (permalink)
Quick Summary
Laissez-faire: The Best Fed Policy Is To Stand Pat

By EconMatters

There was nothing really new out of the 2-day FOMC (Federal Open Market Committee) meeting on Nov. 1-2 without much indication to the widely anticipated further quantitative easing (QE3). For now, the FOMC has basically decided to adopt a wait-and-see stance by maintaining its current policy including Operation Twist through 2012, and keeping the benchmark interest rate near zero to at least mid-2013.



Nevertheless, the more important (albeit coded) message is how much more pessimistic the Fed has gotten just within the past five months. Below are the table from the Fed latest November economic forecast with the prior projection issued in June.



Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



As the table illustrates, the Committee has significantly downshifted the GDP growth outlook, which suggests the Fed is as usual a step behind reality reacting to the summer market sell-off and the weak part of the year that started after Fed's June guidance.



The problem is that by equating past market performance to the real economy, the Fed is once again risking doing too much, too quickly, at the wrong time, as in the case of QE2. Just think about how much better the economy would have been without the QE2-inflated high energy, and commodity prices? (For more detail analysis, see QE2: An Unmitigated Disaster?)



Moreover, Fed's inflation projection, in our opinion, is too optimistic--with a deflationary bias--given the global synchronized liquidity injection since the 2008 crisis, and the robust emerging markets future demand outlook.



The U.S. Consumer Price Index (CPI), including food and energy, already jumped 3.9% year-over-year in September, while the wholesale PPI (Producer Price Index) also surged 7% year-over-year. Moreover, most of the recent economic indicators including trade and freight data are pointing to an increasing risk of inflation or stagflation, instead of deflation. (On a side note, we never get the rationale behind Fed's focus on the "core" consumer inflation, i.e., excluding food and energy, since these are necessities that consumers have to pay on a daily basis.)



Moreover, we are also alarmed by the shifting dynamics within the FOMC members which would suggest an increasing likelihood of another QE2-like disaster. The behind-the-scene story inside the Committee is the emergence of one FOMC dissent--Chicago Fed President Charles Evans-- in favor of further policy easing. Chief Economist of JPM, Bruce Kasman, noted in a Bloomberg interview that Evans' dissent probably reflects the concerns of at least three or four other members on the committee.



After the summer doldrums, the Q3 2011 GDP number is already starting to turn around, jobs numbers are getting better, and there are other signs that the economy is on the mend as well. So the best policies right now for the economy is ironically
  • Gridlock at U.S. Congress, which means nothing would get passed or implemented, and
  • The Federal Reserve standing pat.
These need to take place so to give business as well as consumers a break from the continuing legislative burden, and the artificially inflated food, energy, commodity input costs courtesy of Fed's two rounds of QE.



Laissez-faire, literally means "leave it along", is probably a hard concept for the U.S. Keynesian policy makers to swallow, but since nothing else seems to have worked out as planned, now would be a good time to try something different for the greater good of the real consumer economy vs. the Wall Street "trader economy".



Albert Einstein once said "Insanity: doing the same thing over and over again and expecting different results." QE3, if disbursed with the same methodology as QE2, would be exactly that--Insanity.



Further Reading:

The Pitfall of Rock Star Economists

Marc Faber: Long The Dollar, But Occupy The Fed



© EconMatters All Rights Reserved | Facebook | Twitter | Post Alert | Kindle



More on ZeroHedge...

Reply to share your thoughts on this current event.


Reply



futures io > > > > Laissez-faire: The Best Fed Policy Is To Stand Pat

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
jtEconNews Reader is here as a stand alone app MetalTrade NinjaTrader 11 November 15th, 2013 12:42 AM
CNBC Survey: Like the Fed, Market Is Divided On Policy Quick Summary News and Current Events 0 November 1st, 2011 09:50 AM
Fed's Message to Markets: It's Time to 'Stand on Your Own' Quick Summary News and Current Events 0 August 9th, 2011 05:30 PM
Bank of Japan Stands Pat on Policy, Warns on Output Fall Quick Summary News and Current Events 0 December 21st, 2010 02:50 AM
Obama: I'll Stand With the Gulf Quick Summary News and Current Events 0 June 5th, 2010 10:20 AM


All times are GMT -4. The time now is 12:38 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-16 in 0.07 seconds with 19 queries on phoenix via your IP 54.226.113.250