The Fed is trapped by its past fiat debt creation. From Matthew Piepenburg at vongreyerz.gold:
Poor America. Poor Jerome Powell…
A Real Cliff, Fake Smile
It is no fun to be openly trapped, and even less fun to be in open decline while meekly declaring all is fine.
I have the image of Uncle Sam (or Aunt Yellen) hanging off a cliff with a forced (i.e., political) smile.
Above the cliff is a grizzly bear; below the cliff is a pool of sharks.
In short: Whichever direction one picks, the end result is messy.
And yet the markets still wait for Powell to make the right choice.
What right choice?
Rate Cut Salvation?
As of today, the markets, pundits and FOMC circus followers are all wondering when Powell’s promised rate cuts will come to save the Divided States of America and its Dollar-thirsty, debt-dependent “growth narrative.”
In January, Powell was “forward guiding” rate cuts and thus, right on cue, the Pavlovian markets, which react to Fed liquidity in the same way Popeye reacts to spinach, ripped north on words alone.
YTD, the S&P, SPX and NASDAQ are rising on rising rates hoping to morph lower.
Even gold and BTC are rising on rising rates—all of which makes no traditional sense—unless, of course, markets are just waiting for the inevitable rate cuts, right?
