Political Panic Cut: The Fed Is Not In A ‘Good Place’

Getting your Trinity Audio player ready...

The cognitive dissonance of the American messaging Gods has become truly deafening. And disheartening for those who are bullish on the future of our experiment in representative democracy. We keep hearing from presumed president Kamala Harris – recently installed by her party in an effective coup d’état – about “turning the page” and all the things she plans to do on “day one.”

You know, things like price controls… (cackles).

Never mind Harris been in office the past three-and-a-half years – literally a heartbeat away from a borderline vegetable whom we were gaslit into believing was as sharp as a tack (until it became obvious he wasn’t).

Seriously: Kamala’s going to fix the border? She’s been border czar since March of 2021…

We also keep hearing about how former president Donald Trump needs to tone down his rhetoric… even though Trump haters are the ones who keep attempting political assassinations.

***

We are further told America is risking World War III in Ukraine to “make the world safe for democracy” – even though we overthrew the country’s democratically elected government a decade ago (which is what provoked Russia’s invasion).

And speaking of Ukraine… remember all that Russian disinformation? Yeah. We were lied to. And then we were censored when we dared to object.

When will the lies end?

Just today (September 18, 2024), we were told by the chairman of our secretive central bank – the Federal Reserve – that the American economy was “in a good place.” But… the money printers had to approve a surprisingly aggressive fifty basis point reduction in interest rates in order to “to keep it there.”

This was the first interest rate cut since March 2020 (during the Covid-19 pandemic) – and comes after rates were jacked by 5.25 percent between March 2022 and July 2023 in an effort to combat rising inflation.

Asked whether the Fed was bowing to political pressure in cutting rates, its chairman Jerome Powell stated “we just don’t do that.” However, the White House press secretary hailed the decision as “a moment of progress” and Harris praised it as “welcome news for Americans.”

***

Meanwhile über-liberal congresswoman Maxine Waters of California hailed both the cut and the supposed “independence” of the Fed – which tells you all you need to know about both.

Higher rates limit borrowing, essentially pumping the brakes on economic activity. Conversely, low interest rates allow for cheaper borrowing – which in theory stimulates investment, jobs and economic growth. Rates are lowered when the economy needs a boost – which makes the Fed’s insistence that the economy is in a “good place” right now a bit dubious.

Of course, there’s a catch to the interest rate game: If inflation doesn’t hit its ideal target rate of around two percent, the economy struggles to maintain momentum.

Why is “target inflation” a good thing? Well … incomes have to be created from somewhere, right?  And if the price of a particular item remains stagnant then the paycheck of the worker who produced that item is likely to remain stagnant as well.

Rate cuts take a while to work their way through the economy, but the bigger the hike the faster the impact… which is what the Fed is clearly banking on ahead of the November vote.

The politicization of interest rates is nothing new. During Trump’s term in office, rates were raised seven times in less than two years. By contrast, the central bank raised rates just twice during the entire eight years Barack Obama was in office – and one of those rate hikes was approved in December of 2016, the month after Trump was elected.

Will the rate cut help Harris make her economic case to voters? We shall see… but the Fed’s decision to cut now (and cut big) seems to indicate its governors are “all in” on a Democratic win in November.

***

ABOUT THE AUTHOR …

Will Folks is the owner and founding editor of FITSNews. Prior to founding his own news outlet, he served as press secretary to the governor of South Carolina, bass guitarist in an alternative rock band and bouncer at a Columbia, S.C. dive bar. He lives in the Midlands region of the state with his wife and eight children.

***

WANNA SOUND OFF?

Got something you’d like to say in response to one of our articles? Or an issue you’d like to address proactively? We have an open microphone policy! Submit your letter to the editor (or guest column) via email HERE. Got a tip for a story? CLICK HERE. Got a technical question or a glitch to report? CLICK HERE.