Categories: General Market Commentary / Precious Metals
Topics: General Market Commentary / General Precious Metals

The Fed's Missed Window & Failed Realizations

The Fed's Missed Window & Failed Realizations

The Window Is Closed

I have previously written a series of articles has to the Fed’s inability to hike interest rates this year. (see “Fed At Risk Of Missing Window To Hike Rates” , “The Window Continues To Close” and “Liquidity Trapped.”) In each of these articles, I discussed the ongoing problems plaguing the Federal Reserve and the continued flawed economic predictions of stronger economic growth that continues to fall short.

Yesterday’s meeting was no different. Once again, the Fed not only failed to raise interest rates due to ongoing economic instability, but once again lowered forecasts for future growth and interest rates.

This should surprise no one. The Federal Reserve has continued to hope for the last several years that extremely “accommodative” monetary policy, near zero interest rates, would spark stronger levels of economic activity leading to a rise in broad-based inflationary pressures. Unfortunately, this has yet to be the case. This is due to a monetary policy phenomenon known as a “liquidity trap” which is described as follows:

The problem for the Federal Reserve is that getting caught in a liquidity trap was not an unforeseen outcome of monetary policy, but rather an inevitable conclusion. As shown in the chart below the more active the Fed has become with monetary policy, the lower the eventual rates of GDP, inflation, and interest rates has become. As stated, the current low levels of inflation, interest rates, and economic growth are the result of more than 30-years of misguided monetary policies that have led to a continued misallocation of capital.

To continue reading please click link http://www.zerohedge.com/news/2016-09-22/feds-missed-window-failed-realizations