Time To Change

The U.S. Federal Reserve has convened its much anticipated annual Economic Policy Symposium in Jackson Hole, Wyo. The event, which has taken place each year since 1978, brings together prominent policy makers from around to discuss and opine on the key issues facing the U.S. and global economy. Given that it has often been a forum for the Fed to lay the groundwork for any substantive changes in its policy course, what has been particularly notable during the kick off of this year’s gathering is the intensity of the coverage in the mainstream media about the Fed’s past missteps and the changes needed for its future direction.

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The Drugs Don’t Work

How much longer can the insanity continue unchecked? It has been nearly a decade now since the outbreak of the financial crisis. And it has been nearly two decades now since the technology bubble. Yet the same misguided policy arrogance that delivered us into the last two messes and threatens to propel us into a third continues on completely unchecked. At what point will the appointed policy makers to which we are at their mercy finally realize that repeatedly doubling down on policies that are not working ends up causing far more harm than good in the end? The time is long overdue for a new approach to monetary policy. The question is exactly when such a change finally occurs, and at what cost.

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Why The Fed Must Raise Rates In September

Success in banking is about so much more than financial statements and balance sheets. It is also about confidence and respect that those that are overseeing these financial institutions and their associated markets have the wisdom and discipline to do what is both right and necessary, even if the act of doing so can be both surprising and uncomfortable at times. Unfortunately for the U.S. Federal Reserve, in their undying efforts to be as accommodating and supportive as humanly possible, they have effectively lost the confidence and respect of the financial institutions and markets that they have been assigned to oversee. Such loss of confidence is deeply problematic, as it undermines the potential efficacy of their future actions when they may be needed most. As a result, it is imperative for the health of the financial system that the Fed reclaims respect as soon as possible. And moving to act with a 25 basis point interest rate hike at their next meeting in September would be the best and most direct route in doing so.

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Silent Ambiguity

Where have all the Fed Board Governors gone? Where are the Fed’s regional bank Presidents and their seemingly endless speaking tour to muse about the future direction of monetary policy with every tick of the S&P 500? Of course, it is the heart of summer, so it’s a good time for an FOMC member to get some much needed time off. And how many conferences are happening in early August for the Fed to speak at anyway. But just because the Fed is quiet right now does not mean that the chance for a rate hike at their September meeting is not still very much on the table. In fact, the market today may be vastly underestimating the potential for a rate hike coming out of their next FOMC meeting on September 20-21.

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The Fed Speaks, The Market Ignores

The U.S. Federal Reserve completed its latest Open Market Committee meeting on Wednesday. The Fed’s objective coming out of the meeting was seemingly clear – they wanted to kick the door open for the possibility of another quarter-point interest rate increase in September. Notably, the market decided to hear an entirely different story.

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