The election is over. The “wrong guys won”. Is the Fed about to use temp holiday hiring as an excuse to suspend rate cuts?

Photo above - Michael Corleone ponders whether to leave a tip at Luigi's. Amazingly, restaurant tips became the ONLY economic issue to get significant media coverage in the 2024 campaign. Scant attention was paid to the national debt, the budget deficit, and affordable housing.

Nobody was happier than me when Fed Chairman Jerome Powell stopped 18 months of dithering (“to cut or not to cut, that is the question?”) and finally dropped interest rates by ½% during the final weeks during the presidential race. It’s probably what lots of people would have done they kept hearing that it was the only thing to ensure the wrong guys didn't win.

Regular readers of this column will note that I was lobbying for cuts nearly from the moment Powell started jacking up rates. Charging an arm and a leg for mortgages and loans had zero potential to help us build more housing, or produce more food, or cut my electric bill. Those 3 things are more than 50% of what the average American spends his/her paycheck on. Higher interest rates could NEVER have reduced prices on those things.

Today is December 7. The Fed is hinting that future rate cuts are in jeopardy. Chairman Powell says he can’t be fired, and won’t resign, so suck it up. Bwaaaah !!! His excuse: a temporary surge in holiday season temp hires. Now there's not enough people filing for unemployment. See link at bottom.

There are two takeaways here.

First, putting some guy in charge of all our money - who can’t be fired and doesn’t understand why homes, electricity, and food are expensive - is a recipe for disaster. No other cabinet member has blanket immunity from his/her mistakes. Imagine the Secretary of Defense announcing “I can’t be fired. The bombing starts in 5 minutes.” (That’s basically Putin’s position in Russia)

My second point is that we ALL know why there’s inflation. Houses are expensive because local municipalities make permitting/construction onerous. Electricity is expensive because AI and Bitcoin "mining" use as many gigawatts as entire states. Food is expensive because we pay farmers (mostly corporate farmers?) NOT to plant crops. Everything else is expensive because we have a $36 Trillion national debt. The government spent double what it actually collected in taxes again this year.

Future generations will look back at this and slap their foreheads. “How could they be so dumb?”

Future generations should review the newspapers from this era. Our politicians and the media refused to discuss economic issues seriously. Instead, they tried to divert our attention with abortion, transgender bathrooms, and whether restaurant tips should be taxed or not.

I’m just sayin’ . . .

Jobs report shows hiring surge as Fed weighs interest rate cut