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b"The Fed Slashes Interest Rates for 3rd Time
\\nAs expected, the Federal Reserve cut interest rates today.\\xa0 This is the third rate cut of this cycle.\\xa0 We're now down to 1.5%. But of course, what everybody has to remember is a year ago, when the Fed was hiking interest rates, the forecast from the Fed was that they were going to continue to hike rates.\\xa0 They were supposed to have another 3 or 4 rate hikes in 2019.\\xa0 And, of course, a year ago, as the Fed was hiking rates, they were still shrinking their balance sheet and they were going to continue to shrink it. They were talking about auto-pilot. They were going to continue to do $50 billion/month of quantitative tightening.\\xa0 And they said this with a straight face.\\xa0 And everybody believed them.
\\nNot a Surprise to Me
\\nOf course, everybody except me and maybe a few other people out there in the financial media. But I was telling anybody who would listen - which was not that many people in the mainstream, but certainly the people who listen to my podcasts, that none of this was going to happen. I said that the Fed was going to have to stop hiking rates, and that they would be cutting rates in 2019, and that not only were they going to stop quantitative tightening, that they were going to have to go back to quantitative easing. And that's exactly where we are.
\\nA Distinction without a Difference
\\nAlthough, Jerome Powell went out of his way - I think the first thing that he said when he made his prepared remarks - was to reassure everybody that what the Fed was doing now, with its repo program was not quantitative easing. He drew a distinction between what the Fed was doing when it was doing QE and what it is doing now when it is not doing QE.\\xa0 The main distinction had to do with the maturities of the debt that the Fed was buying.\\xa0 He said that when they were doing QE, they were buying longer term government bonds, but that now, they're buying shorter term government bonds and so therefore it's not QE. But this is really a distinction without a difference.
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