Another Fed Rate Cut Is Expected After Weak Economic Data

This morning’s jobs data: Good or bad? And why did the AJSN tell us latent demand for work fell by more than a million? See http://worksnewage.blogspot.com/2019/10/no-recession-here-american-job-shortage.html.

The question is; is cutting rates in the face of "full employment" a mistake? Where do we go from here?

The real problem our Economy faces all lay at the feet of 45's, TRADE WAR. Now he is placeing Tariffs on the EU, that is already close if not in a recession. 45, doesn't seem to realize we are and have been in Global Economy since the early 1960's. Lowering Interest our rates is a band aid, that will be peeled off, and lower they go the less band aids we will have to stop the bleeding when head into recession if not depression. 45, and the Republicans are faceing a fighting for a Pyhrrhic victory in 2020. Trump wins and the Republicans hold the Senate and we go into either RECESSION or DEPRESSION. Sounds like a Putin plan to me to destroy the our ECONOMY.

All of these unnecessary rate cuts are yet another way to intensify wealth inequality. When the rates are close to zero, what recourse will the Federal Reserve have when the economy suffered and inevitable downcycle or crash? Make no mistake, people who save are getting surreptitiously shanghaied by these gratuitously low and inappropriately decreasing interest rates . The value of their savings is being eviscerated from the inside out by savingd account interest rates that pay virtually nothing and steady consumer inflation which invariably accompanies a low rate economic environment.

Anything done now is just postponing the inevitable. All business cycles come to an end. The more the Fed does now to stave it off, the less it has in its quiver to respond when really needed. While we show high employment, wage growth is not keeping up with inflation, hence, more income inequality as the wealthy benefit. The critical point being missed is that the value of labor is declining. As technology and automation replace labor costs, there is simply less demand for labor, hence its value declines. Go back to 2000 and the 'great decoupling.' Before then, when a company improved their productivity fewer highly skilled workers were hired, many lower skilled works let go. Before 2000, there were other jobs these lower skilled workers could move to. Not anymore. As income inequality grows, as labor value decreases, a growing number of individuals will not be able to purchase what they need to survive. That is when capitalism crashes. Capitalism requires exchanges, importantly labor for goods. We are on the on-ramp right now. Watch out as neither party gets the core issue at hand. The GOP tells us that the bad things are from the 'other', the muslim, mexican and migrant. The Dems want wealth transfer to keep capitalism feasible. We need to prepare for the transition to a post-capitalist society, where what is necessary to survive is guaranteed, and money is replaced as a measure of success by what you provide and produce.

Yeah, let's make it even easier for companies to borrow MORE untold billions for next to no cost, while mismanaging their resources, and steering the cream to the top executives. Then, when they go bankrupt, the taxpayers, who haven't earned squat on their savings, but are paying 23% on their credit cards, will bail them out, again. FOLLOWED BY A SERIOUS RECESSION, that will only harm the 60% of citizens who are not well-to-do, NEVER to recover. Great Idea! Let's do THAT, again!

But just the other day, Neil Irwin insisted that the economy was robust and that warnings about the coming recession were hysteria. So confusing.

If the rates are cut now, when the economy is strong, what tool will remain in the toolbox should a real downturn occur? This feels more like a political favor to prop up Trump than sound economic policy.

If the Feds lower interest rate again, thereby confirming their fear of further economic down turn, will that stimulate investment? Trump asked for lowered rates to stimulate the economy and he now may be getting what he asked for. But perhaps what Trump asked for, i.e. lowered Fed interest rate, may spook the markets and produce a negative effect on the American economy?

Thanks a lot. Older people, and others struggling to live on the savings they struggled to acquire.....well, we’re being nailed to the wall. We are already trying to absorb higher health care and drug prices, and now the higher prices of the basics that the tariffs are causing. Painfully low interest rates on our dwindling savings? The coup de grace.