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re: Trump says rate cuts are a litmus test for new Fed Chairman
Posted on 12/10/25 at 6:11 pm to Bard
Posted on 12/10/25 at 6:11 pm to Bard
quote:
Explain what you disagree with and why.
I disagree it will signal they have lost control. That 2% was "created" in 1988
quote:
However, what in the world dictates the inflation target rate should be 2% in a Fiat economy with a $40T debt, and $2T deficits?
Exactly
1
Posted on 12/11/25 at 8:42 am to SDVTiger
quote:
That 2% was "created" in 1988
That's the point though. They have now spent decades building and pushing a mythos around why that should be the target and thus far they have never wavered. Almost everything they've done since then has been about maintaining that rate as a ceiling, it's pretty much in the Fed's DNA now.
So, after all that time and effort, why would they pivot away from it?
Posted on 12/11/25 at 8:57 am to NC_Tigah
quote:
However, what in the world dictates the inflation target rate should be 2% in a Fiat economy with a $40T debt, and $2T deficits?
That's not the point, the point is that governmental entities are slow to change course especially when it's something the consider foundational to their mandate. A lot of that comes from how government likes to keep things as static as possible while also preferring remedies to be as "one size fits all" to be so as well.
After all the time and effort the Fed, multiple administrations and multiple Congresses have put into creating and reinforcing the 2% belief (which fulfills both drives of simplicity and being static), they aren't going to move away from it without there being some sort of irresistible market force which makes them change.
With all of that said and after your having followed the Fed for as long as you have, what other reasons could you see for them to abandon the 2% goal?
Posted on 12/11/25 at 10:20 am to Bard
quote:
FED CHAIR POWELL: "Conditions in the labor market are cooling, and inflation remains somewhat elevated."
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