Three days after I posted about how the Fed’s rate cuts are disappearing into the banking black hole, the Wall Street Journal published on the same subject.
In an interview with Richard Fisher (Dallas Fed President), Fisher said about the Fed’s recent rate cuts:
“It’s really a question of, are we getting the bang for the buck? And clearly we’re not.”
Fisher then went on to discuss how the rate cuts have not improved access to credit for small businesses, which create all the new jobs in the economy. If small, growing businesses can’t get loans, then they can’t expand and create new jobs.
Fisher also agreed with me on the idea of a “Shallow, but Long” recession instead of the current theme of “Short and Shallow.”
You heard it here first!
Hi Matt,
I think “long and shallow recession” is a contradiction in terms. If the
recession will be longer than WallSt. expects right now it will also be a
very protracted and serious one. We are at the very beginning of the
recession and if unemployment goes up this will have a devastating
effect on the economy.
Dressguard,
“Shallow” is really only a technical distinction referring to the official GDP numbers. The last recession was devastating for a lot of people, yet GDP never turned ugly. For 2001, GDP was actually +0.80%.
Matt
Good point. Thanks for the background information.
