The Edge Gets Nearer

Everyone has a story or two from their growing up years.

There was a local character in our town who went around the neighborhood telling everyone for months he was leaving until, guess what?, just to save face one day he had to leave. That's what the Federal Reserve has been doing for some time now, telling everyone and anyone who will listen they'd like to raise interest rates.

It's really a backdoor way of asking if it's okay to do so. It's a CYA move bureaucrats are noted for. Given the falling dollar, since late January it's retraced quite a bit, investors are putting it all together and seem to be betting it won't happen this year. The dollar's recent decline, down 5% since December, to its lowest level since June is just one more piece of evidence these central bankers know not what their are doing.

Jawboning has its place, works sometime, but sooner or later it too gets exposed for what it is. Some would label it bluffing, others flat out indecision or incompetence. The real truth is economic global growth  remains quite soft. And all the phony reverenced for econometric models and dot-plot nonsense can't change it. Economists are noted for despising anecdotal  evidence. And why wouldn't they be, since it would eliminate the need for having them.

This Fed loves to hide behind terms like balanced, muted, anything that allows them to hedge or obfuscate their ignorance of what's going on. Messes are difficult to clean up, the most difficult are those you created. The recent surprising strength of the yen in the face of negative interest rates and what can only be called a hog wild monetary policy for years now baffles these textbook gurus. The same holds true for the EU. Australia recently cut its rates and their currency strengthened.

So expect to hear more about "new normals," a term another one of the blowhard, egocentric economists, Mohamed El-Erian, supposedly coined per his latest tome. The only thing new here is central banker incompetence is finally trickling down to the  masses.  Applause to the Internet. The only thing normal is these bureaucrats, left unshackled, are leading us to the same old place they always do, the edge of the monetary cliff without benefit of clergy or recourse.