The Case Against A December Rate Hike

Is the Federal Reserve really going to raise rates in December? If they do hike rates and the economy falls apart, they are going to say, "You see, they hiked rates, they did it, they ruined the economy! The Fed did a mistake by raising interest rates."

They do not want to risk that. If they never raised rates and the economy turns down, they will think they were smart.

The Fed Is About To Run Into A Brick Wall

Recessions do not start with layoffs. First the economy turns down and then companies layoff. Companies do not just start laying off people for no reason. Employees react to the recession. The economy turns down, sales turn down, and then businesses start to lay off. Then these layoffs make the existing recession even worse.

You can`t just look at the unemployment numbers and make monetary policy from that as if that is the data that really counts. The Federal Reserve wants to make economic policy looking into the rearview mirror. They are about to run into a brick wall!

Economic Data Is Consistent With The Beginning Of A Recession

The economic data is awful. This data is consistent with the beginning of a recession. This is when the Federal Reserve typically would be easing monetary policy but the problem is they never tightened. The recession has already started and they never finished fighting the last one.