Fed Declares End to "Policy Accommodation"
In a separate development, the Federal Open Market Committee (FOMC) released notes of a recent meeting in which its members called for "fiscal discipline." Interestingly, the minutes of this meeting were released in a more timely manner than has been the tradition of the FOMC. The early release was hailed by analysts as a move toward greater transparency of Fed activities. However, most financial news outlets did not mention that the early release of these minutes with the call for greater fiscal discipline happened in striking coordination with the Fed's open statement on Monday about the end of monetary policy accommodation.
Taken together, these two overtures seem to indicate that the Federal Reserve Board has begun a carefully coordinated information campaign to signal the Bush Administration and Congress of significant concerns in financial circles about Administration economic policy, along with the Fed's unwillingness to be a party to it any longer.
Published 12/16/2004 05:37:22 PM
<< 9 Comments Total
I was wondering about something...yesterday I read an article ( I can't remember where, but it was online) saying that the USDA announced that for the first time in 50 years the US will not have a excess (grain and other agricultural stuffs). We will either need to import some or break even. As a farm girl (no longer, but I grew up on them and around them) I was shocked. For many years the family farm has been sinking into oblivion while corporate farming and the gov paying more to waste food has increased. Does anyone have any idea how devastating this is for our country? The land of plenty is becoming the land of doo-wa-diddly-squat and they better hope they get back on track before we're selling our blood for a loaf of bread.
Actually, from the sounds of this article in November 25's WaPo it's not so much that production has dropped off to the point that we need to import basic commodities, it's that our appetite for foods & food products not produced in this country has increased.
From the sounds of it what will be damaging to production next year is a newly arrived disease, soybean rust. I've read that researchers are hopeful they will find a way to breed rust-resistant varieties of soybeans, but don't anticipate these being available for 6-8 years. This fungus also infects a number of other legumes, a few of which are also food crops.
While winters and dry weather may inhibit the spread of the disease, I think its ability to spread via the winds is impressive, considering it had never before been found on this continent and then within just a few weeks it was found in nine states.
- oddjob
The end of "policy accomodation" is NOT good news for real estate investors (homeowners included), correct? (At least, not in the short-term...?)
- oddjob
Good evening, OddJob.
Oh. You noticed that minor little issue. You see, this fight is happening on Mt. Olympus. We mortals will be the glad beneficiaries of the lightning bolts, burning embers, and assorted other chaff that rains down from the Heavens.
Interest rates will rise because they're the price of money; and as the money supply starts being choked off by the Federal Reserve, its price (interest rates) will go up.
This, of course, means that home mortgage rates will rise, thereby eventually killing off the growth in the housing sector. This has probably already started, and it will become more apparent over the next several months.
There's more bad news. Businesses use credit for expansion, and as interest rates rise, business activity stalls. Hence, rising interest rates will slow down the business sector, which will mean that the employment outlook will get bleaker over the course of this coming year.
Oh, yes, more bad news. If interest rates get high enough, the U.S. dollar might begin to strengthen against other currencies, which will mean that imports from other countries will get cheaper and U.S. exports to other countries will become more expensive, thus causing our trade deficit to widen even further than it already has in its record-breaking run to the red-ink sky. Fortunately, this part of the bad movie might not play out: the dollar has lost a tremendous amount of credibility as the world's reserve currency, so any strength it gains over the coming months will not include the goodwill factor that for so long allowed the U.S. dollar to levitate above the ground level where other currencies had to establish value in trade.
Any way you cut it, though, the coming year—and probably well beyond that—will not be a happy time for we who camp here in the United States.
That's why, OddJob, I am constantly reminding you to stockpile, and learn to enjoy, the simple pleasures in life... like Spam. I'm giving you this advice for your own, long-term good.
Consider it one of my helpful services here on The Dark Wraith Forums.
The Dark Wraith proceeds with tonight's blog-o-rama.
When I stockpile I prefer lentils with rice & sauteed vegetables, thanks. Makes a rather tasty pilaf if done correctly, and it's just as simple & easily stockpiled as ground ham crammed with too much black pepper. (Yes the vegetable part is perishable, but that can be worked with. I happen to like kale just fine, so I can get my green stuff cheap.)
- oddjob
Gary A here....
Otherwise known as the Blogger that cannot sell his house I don't want any slow growth in the housing sector that would be double bad. I do have a possible buyer lined up though. Which is one bright spot I think. I might get out from under the mortgage before the revolution comes ;).
Those Canadian graduate schools for that second masters degree is starting to look really good. If not I will be here in TN to watch the fall out.
-Gary A
(Fingers crossed for a successful sale & closing!)
- oddjob
Good evening, Gary.
A ray of hope for you is that, once a significant number of people begin to realize that interest rates might rise to very high levels, we often see a spike in housing demand right before the final drop-off.
So far, we haven't seen that "credit rush," yet; but that all that might mean is that people are not yet paying attention to the upward momentum in interest rates.
Of course, it could also mean that many people are too lazy to notice.
Soon enough, though, they will. For most of them, however, it'll be too late for them to secure low-cost credit.
Let's hope, for your sake, that we see that credit rush develop... and develop soon.
The Dark Wraith keeps his finders and toes crossed.
I think you're right on track and not many people are willing to admit that they share your views. disc lost season is an AWESOME place to discuss LOST.