To use a different metaphor, the Fed and the Presidents are playing a game of musical chairs with their successors and no one wants to be the one standing when the music stops.
So yes, it's not about the President, but the nature of control over the financial system is not through the interest rate channel either.
I'm not sure how you can come to that conclusion given it is common knowledge and fairly obvious that the Fed has been inflating the economy at absurd amounts to get us out of the 2008 crash.
Sadly, it's highly likely that the current administration will - of course take credit - but more importantly - reap all the rewards (i.e. votes) in the next federal election.
I still am amazed at how Obama pulled the US from the brink of utter financial collapse shortly after taking office. Hopefully the next incoming administration will be as lucky.
The public debt almost doubled from 11T to 20T during his presidency). He also created moral hazard by not only NOT prosecuting people who he himself called "fat cats of Wall Street", but actually continuing to bail them out (started by W. Bush)
It's worth noting I do blame Obama era policies for wage and working condition stagnation/deterioration, which is the thing I actually care about (gdp and unemployment numbers are basically pointless if people who have jobs are living in third world conditions). That said, I have zero hope that the current administrations policies will reverse that trend in any way.
The market started rising promptly after Trump's election, presumably in anticipation of the coming tax cut.
Also, impose tariffs as we're seeing with the last 24 hours.
Businesses don't have to worry about being the primary source of food or housing for their employees either, and somehow this is true without the government taking over agriculture and real estate.
https://fred.stlouisfed.org/series/T10Y2Y
Obviously it's not as simple as that but it certain implies that something uncommon is happening in the financial markets.
But I was happy when it showed up recently. It provides a good explanation about the yield curve and a more specific way to look at things.
[1] https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
There's no rigid guide that the US expansion has to end anytime soon just because ten years was the longest expansion in the prior century. Perhaps this one will last 19 years and set a new benchmark, who knows (answer: nobody).
Could we double or triple the length between recessions? Sure, but I doubt it.
For example, 10 years ago we had quantitative easing done by US/Europe, which led to subprime loans. Now, all of the major economies around the world is tapped out with QE, so deflation is the theme going forward
Also, 10 years ago the dollar prime rate was 0%. Now it's close to 2%. That drives the emerging market capital outflow back to United States, since there is a great need to pay back dollar-denominated loans before rates go up even higher . This means as opposed to 10 years ago where there was capital diffusion from US into the emerging markets, now there's capital consolidation back into US, leading to great FDI for US.
10 years ago, US had the dual threat of energy crisis and offshore/globalization. today, US is the major oil/energy exporter, and robotics/automation/tariffs is bringing factories back to US.
QE did not cause subprime loans - QE was the response to the effects of the subprime loan era.
There was no QE before the liquidity crisis and subsequent economic recession, although it had been discussed academically.
Please don't mistake me for some kind of commie, PG's essay on the necessity for income inequality to drive innovation is convincing. But that doesn't mean we should celebrate shameless cronyism, kickbacks, and rent-seeking either.
Growing middle class income is nice, but income is a very poor metric to use to determine economic class. Net worth is what really matters.
To explain the deflation story especially over the last 4 or 5 years, you need to look at the drop in Oil Prices - which as you point out, is primarily due to fracking and the US going from the #1 oil importer in the world to a small exporter. I wouldn't call the export aspect major statistically, but the change in oil trade terms certainly is.
Tapped out?
1. Kuroda and Draghi are merely taking a breather. BOJ and ECB balance sheets were still growing as recently as April 2018. SNB shows no signs of ending their relentless buying of the QQQs.
2. No global central banks are prevented from restarting QE or QE-like programs at any time of their choosing. The very second deflation again becomes a threat, you can bet your ass that Powell, Kuroda, and Draghi will step on the gas.
"Tapped out" implies limits to the volume of beer in the keg. Central banks have no limits. It is extremely trivial to begin printing money again if these governors/presidents will it so.
What happens when they buy all 100% of ETFs and bonds? Venezuela?
https://www.japanmacroadvisors.com/page/category/economic-in...
https://www.zerohedge.com/news/2017-09-11/wtf-chart-day-boj-...
I sure haven't seen it. The price of gas, rent, food, etc. have gone nowhere but up for me. Is there any sector of the economy where deflation is actually happening right now?
1. The market, and the macroeconomic system in general, is not a purely stochastic process. This is a meme.
2. If by "naive chartism" you mean technical analysis, then sure, I agree. But if you're attempting to reduce the entirety of academic and industrial economic theory and practice to "naive chartism", then your middle brow dismissal here is both incorrect and breathtakingly arrogant.
Our entire economic system is predicated on the idea that there exist inefficiencies that can be profitably capitalized on through cause and effect. No one professionally or academically familiar with this idea claims it's a guarantee, but they also don't dismiss the concept of past data being a useful but imperfect measurement for the future state of things.
Even Fama walked back from the strong EMH, and to claim that we can derive no insight about the future from the past is to utterly dismantle everything we know about the credit debt cycle and market macrostructure. If you'd like to believe that then more power to you, but implicit in that belief is a fair amount of hubris.
You fail to grasp a fundamental reality: data about the past can only tell us about the past. Data about the present can be useful for making predictions. Some of it is so useful that using it is criminally prosecuted by the SEC.
By "naive" I mean any approach that relies solely on trends rather than an actual understanding of underlying causal factors. Sadly there are so many of those factors that a correct analysis is virtually impossible, but that's no excuse not to try since some factors tend to dominate others and those can sometimes be found.
I feel obliged to downvote you because of the first two paragraphs, why did you add them? You were trying to refute what you considered an "accusation of arrogance" with the most arrogant opening paragraph possible?
We can agree to disagree on the exact definition of "virtually impossible", but in the broad strokes I think we're both saying some factor analysis can be sometimes productive. In particular, I definitely agree that 1) an "actual understanding of underlying causal factors" is imperative, and 2) an approach based on trends (and trend following) is naive.
[q] https://www.cnbc.com/2017/11/24/the-fed-launched-qe-nine-yea...
QE "Purchases were halted on 29 October 2014" [1]
[1] https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1,_QE...
Think of the amount - trillions already spent on war. And trillions more in debt because of it.
Confused...
Tell me again how WWII helped all the various economies involved and was not a net loss to the majority of them?
Confused...
The longest we've gone without a recession in the past 100 years is 10 years.