This morning, I’ll be debating about the upcoming Fed cuts on CNBC’s Morning Call at 11:20am.
My arguments are quite simple: Since the Fed cut the discount rate
on August 17, 2007, here is what has occurred:
– The CRB
index is up 32%;
– The US $ Dollar index is down 13%;
– S&P500 is off more than 10%;
– Fed Fund Futures are now pricing in 100% chance of a 100bps
– Generated high level chatter of a coordinated global, multi-national, currency intervention;
What the Fed is accomplishing by cutting rates is stimulating inflation, debasing the dollar, punishing savers, and making travel abroad exorbitantly expensive for all but the wealthiest Americans.
I believe that the FOMC should "man up," show some backbone — cut rates by "only" 50 bps. They might find out what its like not to be at the Market’s beck and call (girl). That should stabilize the greenback, and perhaps send food and energy prices lower (earning Ben the appreciation of consumers through out the country).
A little restraint would go a long way . . .
UPDATE: March 18, 2008 11:57 am
click for video
To Cut or Not to Cut?
Wall Street expects a big rate cut, with Barry Ritholtz, Fusion IQ; Carl Weinberg, High Frequency Economics and CNBC’s Trish Regan