Policy makers’ interest-rate forecasts showed they were building long-term fiscal dysfunction into their outlook even before the partial federal government shutdown and impasse over raising the debt ceiling. Now, the wrangling in Washington is also pushing back the timeline for a reduction in bond purchases that would precede any increase in interest rates. The shutdown has interrupted the flow of government data the Fed uses to evaluate the health of the economy, from factory orders to trade and unemployment. It also threatens to curtail economic growth after as many as 800,000 government workers were furloughed. Data Dependency “The Fed is not going to taper while the government is shut down,” said Dean Maki, chief U.S. economist at Barclays Plc in New York. “One, there is a weight on the economy and, two, the Fed calls itself ‘data dependent’ and it’s hard to be data dependent when there’s no data coming out.”
When the central banks prints to support a malfunctioning government? I think that is called hyperinflation. In this case, the Fed is promising to send the market into the stratosphere. But once government is up and running we will have high fuel import prices and go back to a 1.6% GDP growth. We are better off keeping the shutdown.
No comments:
Post a Comment