Fed issues Asset Value Warning

[errolanderson]

The U.S. Federal Reserve has actually issued a warning of a significant potential drop in asset values this past week. Although central bankers cannot say-the-word ‘deflation’, Powell sees the writing-on-the-wall.

Deflation to a central banker acts the same as Kryptinite to Superman. Central bankers have no remedy.

This is the 1st Fed chair that actually acknowledges the incoming risks of asset devaluation. aka: deflation.

[GDR]

So Errol, I know you think its foolish to raise rates right now but with this warning from the Feds is it possible they will continue?

[errolanderson]

So Errol, I know you think its foolish to raise rates right now but with this warning from the Feds is it possible they will continue?

Definitely, Powell blinked this week. But whether it is from Trump pressure not to hike rates further or from actual reality of a slowing U.S. economy, not sure anyone knows.

It may be a 50 percent chance that the Fed hikes one more time in December, but it was only a week ago the market thought it was a sure thing. Believe when 2019 arrives, the Kyrptinite takes affect. Fed rate hike days are over.

[Oliver88]

Errol on Bloomberg BNN one analyst was suggesting there will be 3-4 rate hikes from the Bank of Canada within 12 months.

Does this seem realistic?

[errolanderson]

Errol on Bloomberg BNN one analyst was suggesting there will be 3-4 rate hikes from the Bank of Canada within 12 months.

Does this seem realistic?

BOC talking up the rate hike game is an insult to western Canada (IMO). Now that Oshawa is in trouble, there will likely be no more rate hike talk from the BOC. This is more political than we would like to know.

[Rareearth]

Google isn’t reporting any US Reserve deflationary asset warnings

[malleefarmer]

https://www.businesstimes.com.sg/government-economy/fed-stability-report-banks-households-strong-but-asset-values-elevated

[ajl]

Bring on deflation, it is good for the little guy, Not good for politicians I realize. I agree that tightening is done and interest rate hikes are done. Possibly one more raise in the US next year but none in Canuckistan as our economy is done. Time for dumpster diving. With these debt levels, what would interest rates be if there was no central bank money printing?

[chuckChuck]

BOC talking up the rate hike game is an insult to western Canada (IMO). Now that Oshawa is in trouble, there will likely be no more rate hike talk from the BOC. This is more political than we would like to know.

Errol give us some examples of how the BOC makes political decisions on rates? Lets start in the mid 2000s through the oil boom till now.

Remember eastern Canada lost many manufacturing jobs when the loonie was very high because of high oil and commodity prices.

The BOC has no influences on commodity prices or world macro economics either then or now, so how can the current rate policy be an insult to western Canada when the BOC is responsible for managing rates for the entire country, not just one region or the other?

[ajl]

All rate decision are political. Fact is rates should have been higher for the last decade because of too much debt but central banks have been suppressing them. This would have prevented asset bubbles and the phony boom in the first place. Recent rate moves are bringing them back to more of a market rate.

[macdon02]

There should be a 2 rate policy, 1 for the commodity dependent west and a second for the manufacturing and financial dependent central/ east imo. Simply sharing border to the US doesn't mean conditions are the same throughout Canada. But they're gonna force it anyhow .... history on the Fed recognizes differing economic conditions by area but they figured they could force everyone in the same boat. Hence the different banks under the Fed and how they got their start. History, people ....

[chuckChuck]

Increasing rates when economies are barely growing or stagnant is a recipe for recession.

Low rates cause certain kinds of problems but so do high rates. A balance is required.

[macdon02]

Increasing rates when economies are barely growing or stagnant is a recipe for recession.

Low rates cause certain kinds of problems but so do high rates. A balance is required.

Yeah well pensions are bleeding to death from the last "solution". The alternative is to let socialism die without a fight. We are going to 10%. Think about the repercussions of pensions defaulting ....

[ajl]

Yeah well pensions are bleeding to death from the last "solution". The alternative is to let socialism die without a fight. We are going to 10%. Think about the repercussions of pensions defaulting ....

That is the conundrum. Rates need to go up to reestablish real economic growth and right pension plans but the economy has been on life support for so long, if the B of C was abolished as it should be, what is left of the economy in Canuckistan shuts down this afternoon. Screwed either way. It is over. Get ready for depression.