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Has Fed Quantitative Easing Painted Economy into the Corner?

FED QE has painted economy into corner
Todd "Bubba" Horwitz on Liberty Talk FM - Image Rotator Photo

BY: Todd Horwitz, Host & Senior Contributing Analyst
PUBLISHED: May 1, 2015

Economic Outlook Worsens, Fed looks to hold off Interest Rate Hike

Bubba comments on the issue he has dealing with the the Fed’s current position. He believes the central bank has painted itself and the American economy into a corner, while having no clear exit strategy. The unbelievable amount of debt created since the Housing Market Crash of 2008 will take generations to emerge from all the red ink. Moreover, Todd explains how raising short term rates will only exacerbate the problem by causing the dollar to get stronger which will have a negative impact on the entire U.S. economy.

Hane King joins the show and Bubba speaks to her on how she sees the markets through the eyes of the average investor. She outlines that energy prices remain the key issue. The consumer is concerned that if/when gasoline prices rise, the increase will cut into their disposable income. Further Jane comments on how unless you are in the upper income levels, it is hard to be financially independent in today’s society.    

Bubba then seeks Mike McGlone’s opinion as to what he thinks of the Fed’s move on Wednesday.  Mike comments that the Fed is still talking about tightening when the market doesn’t seem to be getting stronger. He talks about how the Fed funds rate for December, which had priced in a 50 basis point rise in December has now reduced that expectation to 25 basis points. He further illustrates how the FEDERAL RESERVE is stuck and has no where to go, as there is no inflation according to their metrics.

Bubba comments that the role of the FEDERAL RESERVE was never meant to be actively involved in actual trading in the markets. To wit Mike agrees, stating he believes that the Fed is run by academics and they are indeed not very good at trading, as they do not understand trading markets yet the attempt to try to use their academic backgrounds to force their  data analysis on the markets. Thus the result is the Fed projects its view on the market rather than allowing the market to dictate a proper course. They have “dream” data that they use for decisions.

About Jane King

Jane King PhotographWith 15 years of covering money news, Jane King has been bringing her audience not just breaking economic news but also “pocketbook” issues. The decisions moms make at the supermarket, high school students weighing various colleges, helping young couples buy their first home.

[Full Bio at LiliMax Media][Follow Jane King on Twitter]

About Mike McGlone

Michael McGLone PhotographMike is Director of US Research at ETF Securities. In addition to writing the ETF Securities Precious Metals Weekly and his other research and strategy responsibilities, hes a frequent guest on CNBC, Fox Business News, and Bloomberg. Prior to joining ETF Securities, Mike was the Product Manager and head of commodities at S&P Indices where he led the development and oversight of the S&P Goldman Sachs Commodity Index.

[ETF Securities – website]

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Todd Horwitz began his career in the financial industry as an option market maker at the Chicago Board of Options Exchange in 1982 and was one of the founding traders in the SPX pit. He is an active member of the am currently a member of the Chicago Board of Trade.