On May 28th, I appeared on RT’s Boom Bust with Eric Ade, talking about about the Fed, Greece and Italy.
For some time the Fed has been talking about raising rates, but the stream of economic data we’ve been seeing doesn’t give the FOMC, (Federal Open Markets Committee) much of an argument for raising rates. Employment gains have also been exceptionally deceptive, with much of the gains in low paying industries. However, if the Fed doesn’t raise rates, that significantly reduces the arrows in their quiver if/when the U.S. goes back into a recession, which given the normal business cycle timeline, would be reasonable to expect in the near-to-mid term. That being said, with all the manipulations in the markets and the economies since the financial crisis, nothing is “normal” and the unreasonable has become the reasonable. The single most important price in the economy is the price of money. Once that is no longer priced freely by the markets, which is impossible with all the interest rate manipulation by central bankers everywhere, the price of everything else gets seriously distorted.
We also discussed the prevailing narrative I wrote about in an earlier post surround Greece and the potential Grexit, which is based on the assumption that the nation’s problems stem from a workforce that is either lazy, stupid or worse. Finally we discussed how much of what is happening in Greece, is present elsewhere in the world and in particular causing much of the economic angst in my second home, Italy.