A few thoughts following the FED performance today:
1. It is clearly fatuous to expect a valid debate about economic management whilst ignoring the elephant in the room. The White House is using its Political sledgehammer to crush the FED’s Economic independence – and it is winning. There is no coherent or robust economic argument for cutting interest rates except that is it part of the reelection campaign for the President.
2. The FED chair may well be a wonderful human being and a delight around the dinner table but he is an ineffectual presenter who looks woefully out of his depth when viewed against the arc light brilliance of the President.
3. The market voted with its feet. Despite record levels of employment, low inflation, a strong consumer, a record stock market and a series of constructive quarterly results – all the markets sold off.
All of this matters. The US remains the only go to economy – the rest are in all manner of troubles, not least the UK, Europe and China. The US influence is felt throughout the world and can be a force for strength or for increased risk. At the moment we are failing to provide that strength or leadership – it is as though we really do not care.
This has been a disgrace.
Have a good day, James