End of loose monetary policy?

Discussion in 'Economics' started by CoolTrader, Nov 30, 2021.

  1. I am a bit surprised Powell wants to speed up tapering. What would he do if end of QE plus omicron variant send the economy into recession?
  2. JSOP


    He will adjust. In the statement after the last FOMC meeting, he did say that the Fed “is prepared to adjust the pace of purchases if warranted by changes in the economic outlook.” So if the economy goes into recession which I believe would qualify a "change in the economic outlook" it will adjust the pace of purchases, in this case slow down the tapering, I would assume.

    And "Powell has also stressed that the tapering should not be seen as an indication that rate increases are looming." So the Fed is just not buying the bonds, that doesn't necessarily mean that it will increase the rate immediately. It's just slowing down the printing.


    Without this omicron s***, this course of action by the Fed is quite reasonable. I mean you can't keep printing forever. You have to stop some time. With the economy reopening, everybody gradually going back to normal, gradually withdrawing support is the right thing to do. It's just this unexpected omicron s*** that's thrown in there that's putting this plan out of context of what's happening a bit.

    So what Fed needs to do is like us traders; it needs to have a concrete consist plan that spells out exactly what it will do in different scenarios and be able to quickly adapt to new situations and not in this "point and shoot" approach.
    murray t turtle likes this.
  3. No. It will never happen. Their decisions are driven by the color of $SPY bars.
    Laissez Faire, SunTrader and ElCubano like this.
  4. there's an elephant in the room that everyone is either ignoring or oblivious to - and if i'm wrong i apologize in advance. the spike in covid cases in europe are occurring in countries with higher vaccination rates than the US. if you look at yearly charts, a spike in cases in the US would not be completely unexpected to occur in January. if that happens, how does it fit with rates, tapering, and the market? is this a btfd opportunity, or is the market already thinking that with or without Omnicron, a spike in cases could be headed for N. America?
    murray t turtle likes this.
  5. It's always been BTFD
    unconventional wisdom likes this.
  6. The worst case scenario is covid variants keep coming and the new vaccine is always a few months behind the new variant. You always have the risk of catching the new virus. This is going to have an impact on the economy. What would the Fed do in this case? If they QE forever, US would become the next Turkey.
  7. JSOP


    Yeah but eventually we will get used to it and adjust accordingly once the virus is brought under control. Fed won't have to QE forever. Eventually the economy will adjust, workforce and supply chain will adapt if this virus becomes a way of life for us while it's under control just like the flu has. We get sick with the flu every single year and yet we still carry on and we don't even get vaccinated against the flu. Why? Because the flu is under our control. It's always there but it doesn't affect us. This QE is just a temporary measure that's put in place to give us a bit of a boost so we won't fall too hard while we fight to bring the virus under control and adapt to living with it once it's under control. Eventually the QE has to be taken away once everything is adjusted and our life will go back to normal, a new normal.

    The key is bringing this covid virus under control.
    Last edited: Nov 30, 2021
  8. MKTrader


    If moronic (anagram of "omicron") send the economy into a recession, we're even bigger snowflakes than I thought. The symptoms are quite mild. Don't be a diabetic, 350-pounder who rides scooters in Costco before you're 80 and you'll be fine. It's mostly about the co-morbidities.
    nooby_mcnoob likes this.
  9. MKTrader


    More like bringing common sense and a small bit of courage back. If you're not high risk, you don't have to hide under your bed all day.
  10. JSOP


    No more like redesigning the vaccine to target something else on the virus other than its spike protein. If all of the mutations are happening on the spike protein then if your vaccine is just targeting the spike protein then you will always be one step behind playing catch-up, never able to eradicate the little s***. Maybe it's what the virus does, its mechanism of replicating, suppressing our natural immunity and infecting the host that we need to target. So that wy, no matter how it mutates, it will always be killed... Just thinking out aloud
    #10     Nov 30, 2021