Wall Street usually gets what it wants from the Fed, and screams bloody murder when it doesn’t. From David Stockman at lewrockwell.com:
There is surely no development more inimical to main street prosperity and democratic governance than the lock, stock and barrel capture by Wall Street of the nation’s central bank. That baleful condition enables and sustains the two very worst forces in American society today—the spenders and warmongers of Washington and the Wall Street speculators, who otherwise claim to be traders and asset managers.
The not-so-secret sauce of the Fed’s rogue monetary regime, of course, is artificial, ultra-cheap interest rates, which have been sustained over extended periods of time. In fact, the Fed’s key policy instrument—the Federal funds rate—has stood at negative levels in inflation-adjusted terms for more than 93% of the time since March 2008. And even the current positive rates barely peeking above the zero bound per the chart below are still far, far below the healthier levels recorded from 1984 through the year 2000.
Yet ever since the real funds rate turned marginally positive in July 2023 the crescendo of drumbeats on Wall Street for a new round of rate cutting has become overwhelming. Then again, what the hell was so onerous or economically oppressive about the real Fed funds rate at just +1.82% in February?
To hear the Wall Street crowd tell it you’d think the US economy was about to be drop-kicked into the recessionary drink in the absence of a new round of rate cuts. But that’s just risible, blithering nonsense. The only plausible reason for rate cuts after years of negative-cost money in real terms is to trigger and sustain a new bubble atop the already wildly inflated stock market.
