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The futures dropped before the closure of SVB. It's just a bunch of big gamblers reading into every Fed members mind and has little to do with reality. Powell talked tough that got this 50 bet going but it never really made sense. They will do 25 at a time until they are ready to stop barring crazy news.
Regarding the bold -- I remember when the same interest rate prognosticators even took photos of Alan Greenspan walking to work and the thickness of an expandable satchel he carried, trying to figure out if it contained a lot of papers or not that many, and what the impact was on future interest rate movements.
Years after he retired from the Fed, Greenspan was asked about this; he chuckled (he's not prone to humor) and said, "some days I put a sandwich & an apple in my satchel."
The only target I find is to get inflation down. The current unhealthfully low unemployment rate is not sustainable.
Will they have the nerve to resist the political blowback of high unemployment AND inflation?
Inflation when everyone has jobs and can switch jobs at will is one thing. Yes inflation sucks, but people have more money than they've ever had so they're managing it.
Inflation when people are losing their jobs is quite another. THAT is the "stagflation" that everyone's afraid of. High inflation, high interest rates, and high unemployment = 1982 recession, which was pretty ugly.
when you are missing 10 million workers low unemployment can be a fact of life .
the spike in lost workers over the age of 55 since the pandemic ,soared
ages 55-74 that left the work force for one reason or another
Planet Money just had a podcast last week on where the workers went.
About 500k died from Covid. Working age people. We like to pretend that Covid only hurt old retired people, but it took out a non-negligible number of working age people.
Another 300-500k-ish are "damaged" by Covid somehow - either a little or a lot. Either way, they don't want or can't work more than PT or remote.
Another 500-900k dropped out due to child care or elder care issues. As worker availability declined for those services, they can't back-stop their own work, so they quit, downsized, and live off of one income and/or the income of the elder, etc...
[I know a 38 yo woman who did this. She was working. Not great jobs - service jobs like waitress etc... the kind that's hard to hire for now. During Covid her grandma got sicker & needed help. She quit to help her. Grandma doesn't have a ton of money but she has enough to help granddaughter survive if she supplements it with gigs like Uber-ing 15 hours a week. They have an understanding that grandma's house, which is paid off, will go to her when she passes. Grandma bought her a new car. Etc...]
Over 2 million retired. Workplaces were surprised how many. They interviewed an employer that gave an early retirement incentive during Covid, thinking it was a responsible move to front-load some savings on payroll. They thought a handful would take it. Instead, a flood of people took it and all that institutional knowledge disappeared practically overnight. Now they can't replace the retirements so they're just making do with less.
I guess what surprises me is that our workforce was kind of like the "just in time" manufacturing. I didn't realize how a relatively small # of workers dropping out or phasing out would cause such a big problem.
The Fed Reserve lowered bank reserves to 0 in 2020 and it's still at 0 today.
That means banks do not have to keep any reserves to satisfy cash withdrawals.
Banks had to keep reserves based upon a formula for each bank.
So of course a bank will run into trouble when a big withthdrawal happens and they have no cash on hand to satisfy that withdrawal.
Over 90% of SVB customers had over the $250K deposit insurance.
Roku had nearly $500 million deposited in SVB.
What we have is a textbook example of Moral Hazard.
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