Business

By EconMatters

What a bunch of nonsense.

For seven years now we’ve been told the US is in a recovery. However, if this were the case, the Fed would have started raising rates years ago (likely in 2012). No other recovery on record saw the Fed maintaining ZIRP for so long.

There is simply no factually credible argument for why rates should be ZIRP if the economy is expanding. You cannot have claims of a “recovery” or expansion while ZIRP is in place. ZIRP is meant to be an emergency policy meant to pull the economy out of a severe recession, NOT a long-term program.

With the Trump vs Clinton showdown set to begin and conclude precisely 6 months from today, the market is finally starting to focus on how either of the two presidential contenders will impact various asset classes. In this vein, over the weekend, Deutsche Bank's Alan Ruskin issued a report on how FX trading will be influenced by politics, noting that the channels through which the coming election will influence the USD are complex and sometimes contradictory - which will probably mute the response to some degree.

In a recent interview with CNBC's Rick Santelli, Richard Fisher, former President of the Dallas Fed, explained “The Fed has the market on Ritalin—trying to keep the mood very smooth, keep volatility down as much as possible. As soon as they hint that they might remove that, then they create the problems they're afraid of. So, they've boxed themselves into a corner, and the real art will be to see how they manoeuvre to get out of that”….“When [the Fed] move—and I hope they move sometime in June—there'll be a settling in of the marketplace. There will be a correction. Suck it up.

Submitted by Danielle DiMartino Booth via DiMartinoBooth.com,