It's Friday and several of the Fed members are sounding off and the markets are reacting violently. Let me ask you a few simple questions:
1. Is the Fed's next move to raise or lower rates?
2. Will a quarter point hike really impact the economy?
3. Does a hike mean that we are nearing full employment and inflation at 2% and rising?
4. Is the Fed trying to slow the anemic recovery or signaling an all clear and a time to return to normalization?
5. Where should the funds rate really be with an economy expanding by 2% with core inflation beneath 2.0%?
6. How will a quarter percent hike effect foreign economies, currencies, commodities and business/consumer confidence?
7. Is it premature (as in December) if the Fed raises rates in September or should they wait until the global economy is on sounder footing?
8. How will a quarter point hike affect the yield curve, currencies, commodities and stock valuations?
I want to begin by stating that rates are as low as they will go this cycle everywhere unless something bad happens impacting the global economy. Secondly, the benefits of easy monetary policies are behind us so it's time for actions by governments everywhere to change fiscal, regulatory, tax and social policies to stimulate growth. Let's pass the baton from monetary authorities to governments to carry our economies forward. Until these changes are implemented, our economies will stay stuck in a rut regardless of monetary policy.