This article was published by The McAlvany Intelligence Advisor on Wednesday, June 13, 2018:
The core underlying principle of Keynesianism is that the massive $21 trillion American economy can be “managed” by “experts” sporting fancy degrees from prestigious colleges and universities. The fact that they take themselves seriously, as does most of the media, reminds one of the story The Emperor’s New Clothes. Everyone in the crowd believed until the little girl exclaimed, “The Emperor has no clothes!”
That time has not yet arrived for the Fed. Amy Scott, writing in Marketplace, continued to believe the emperor is clothed:
The Federal Open Market Committee begins its two-day meeting today to talk interest rates. The Fed is expected to raise its target rate by a quarter of a point for the second time this year [tomorrow]. And with unemployment reaching a new low last month and inflation creeping up, analysts expect officials to keep raising rates throughout the year.
If short-term yields keep rising, that could lead to what’s called an inverted yield curve, when short-term term rates are higher than long-term borrowing costs.
First, Scott is conflating inflation with price increases. Second, she is likely referring to the latest CPI numbers and not the Fed’s preferred measure of price increases, the PCE index.
Inflation has already occurred.