Navigating The Fed's Expected Rate Cuts

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> Navigating The Fed's Expected Rate Cuts: The Impact For Consumers, Businesses And Investors

Overall, not the greatest article.

This seems to promote a misleading understanding of how interest rates being lowered will impact the economy, by taking parts in isolation that are not static or independent, and associating them with past performance neglecting current and past conditions.

Here's a brief gist:

There is no mention of the impacts that the current stagflationary environment will have as part of the expected changes (rate drops), and it fails to follow trends from historic data.

Anyone with knowledge of such can verify the indicators for stagflation are present in existing lagging indicators from public data and reports (which is why they have to lower rates), but it won't help resolve the debt trap which means rocketing inflation. Support system's to create a basic floor for the poor will worsen because they are fixed bureaucratically and in all likelihood will potentially collapse.

They won't even publicly recognize the fact that the data shows it is stagflation.

This is evident in the claim that low interest rates equate to more consumer spending (as purchasing power), more business spending, etc. There will certainly be higher dollar amounts, but same purchasing power, and disinflation (which is reduced forward looking growth), and increasing inflation.

It neglects losses in purchasing power, assuming once again that we live in a 2% inflation per annum world when we do not.

Of great importance, it makes no mention of the expiration of the petrodollar agreement or how that impacts the coming disadvantaged monetary environment we face with little local manufacturing (which may act similar to the Weimar collapse). Failure boundaries are based on ability to exchange for food, necessities for self, spouse, and several children. It will hit the middle and poor the worst wiping them out.

The aggregated historical data is readily available in Ray Dalio's Bridgewater Report on Big Debt Crises. The conclusions in the report promote a beautiful deleveraging but this neglects the interactions of a concentrated and brittle producer sector with regards to pricing and forard looking production.

For the most accurate model, the most reliable data comes out of economic data from Japan. They are roughly 10 years ahead of the US, and arguably their deflationary trend has been greatly offset through infusions from US interests, which will not be available to the US when it is our turn. They are barely treading water in terms of controlling deflation.

Historically, the petrodollar agreement was pivotal to overcoming stagflation previously, and including it in analysis from historic data previously shows it offset inflationary losses as demand for reserves at the time greatly increased. Today the opposite trend is now occurring.

It is necessary to correctly account for this with regards to existing offsets and net deficit spending over the past several decades. We are now at a point where the pool of USD as foreign held reserves has less demand and is shrinking (this offset is no longer happening).

The entire article seems to be solely to signal to the wealthy that there will be rate cuts in the near future.

They expect you to know how the mechanics actually work and seek to mislead those that don't. It is everything we've come to expect from these types of special interest groups.