How often have Fed chairs painted pictures of economic tranquility, only for financial storms to follow? In the past several decades, anytime the Federal Reserve cut interest rates by 50 basis points or more, historically, what wasn't said was, "this is a good labor market... this is a good situation, let's be honest, this is a good economy." Well, that's what Jerome Powell said after the FOMC meeting recently. His declaration that the economy is in "good shape" mimics a pattern seen in previous rate cuts that preceded significant economic downturns. While Powell's words may be intended to calm markets and guide expectations, when do words blur the line between deception and dishonesty.
Let's revisit some of the key events where 50+ basis points rate cuts were followed by economic turmoil:
* 1970s: Oil Embargo
* 1980s: Savings and Loans Crisis
* 1990s: Gulf War Recession
* 2001: Dot-Com Bubble; 9/11
* 2008: Global Financial Crisis
* 2020: COVID-19
* 2024: Powell's "Good Economy" Assessment
LIVING IN THE CRYPT0SPHERE NFT
I understand, the reasons behind the Fed's sometimes questionable economic assessments are complex. Maybe, political pressure, the desire to maintain economic stability, and public perception, all play a role. Historically, the Fed has faced criticism for its perceived lack of transparency and its role in economic downturns. However, for Powell to come to the "good economy" conclusion, he may not be "cooking the books" but he is rearranging the ingredients to make a more palatable fiscal meal.
While the green candles in the traditional and crypto markets may be cause for celebration, dependent upon in which America you reside, history suggests that this short-term pump could be followed by a long-term dump. The Fed's significant rate cut reflects the challenges facing the global economy. While Powell's optimism provides some reassurance, historical precedents and the magnitude of the cut warrant caution. As investors and consumers if you aren't currently learning how money works you are doing yourself a disservice. As bad as a recession can be, there is always opportunity in chaos. Nothing short of a revolution will change how our economy works. So until then, the goal of us crypto degens is to move from America to..., America.
