Archaic Fed theory

[Carlos Ptriawan]

cc: @James Hamling 

So today is very interesting. Job market is extremely robust that we add 300k jobs than 150k predicted job. In theory this should not be good news because then Fed would have reason to keep the interest rate for longer, but market doesn't care, bond is rallying. 

But the real question is this. Why in the world that Fed believes that to reduce the inflation then they have to reduce employment ? Is that logic reasonable or even valid in 2023 LOL It seems Fed Chairman Powell has very archaic way of logic in this mindset (wondering if he uses instagram), that to reduce inflation he has to create people jobless ? LOL

Today Lawrence Summer, the ex Treasury head during Clinton era is saying the following :


"We may be living in a world where the interest rate is less of a tool for guiding the economy than it use to be, and that means when things need to be cooled off interest rates are going to have to be more volatile," says Former US Treasury Secretary @LHSummers

So what he is saying is precisely that. That in 2023 interest rate and even the Fed , could be really irrelevant to influence the economy.

We're in the world where every central bank philosophy failed to guide the market. In US the Fed failed to guide the economy as market remains strong (Staglation ,James ?) while in Turkey, the pro-printing Erdogan is still facing actual hyperinflation from currency devaluation.

From what I see, especially in job market and housing market, every segment has its own the over-run the Fed policy, making them irrelevant, which makes the whole market seems more smarter than the old man that used to guide us.

Housing market is smarter than the Fed. Job market too. Nobody predicted this a year ago, including me, but James analysis is almost about correct.