For every Federal Reserve chair since 1970, their first policy move occurred at their very first FOMC meeting as Chair.
The first moves of the incoming Federal Reserve chairs since 1970 are heavily weighted toward raising interest rates, with only one historic exception (Arthur Burns) executing a rate cut out of the gate
The “Maestro” Alan Greenspan raised the discount rate from 5.5% to 6% in an early tightening action on September 4, 1987. But faced the historic Black Monday crash just two months later, swiftly pivoting to inject emergency liquidity, followed by various cycles of preemptive rate hikes and long-term accommodation through the 1990s and dot-com boom. Stock Market 1 Year Later: -21.2% (S&P 500 return 12 months after August 1987), heavily distorted by the catastrophic October 1987 market crash that occurred shortly after he took office.
In September 1987, an incoming Greenspan raised the discount rate right out of the gate to firmly establish his inflation-fighting credentials with a skeptical bond market. Critics argue that this rapid tightening sucked liquidity out of an already vulnerable financial system, heavily contributing to the Black Monday market crash just weeks later.
Warsh pushed through a rate hike despite immense pressure from the White House to cut rates. Like Greenspan in 1987, Warsh is deliberately signaling independence and an unwavering commitment to crushing stubborn 3.3% core inflation but ignoring that raising rates right now is a mistake because surging oil and diesel prices from the ongoing Iran war are already working to cool consumer demand. Forcing a rate hike on top of an energy price shock risks over-tightening and pushing a fragile economy into recession—the exact trap Greenspan walked into.
Who said history doesn’t repeat but rhymes or is it “this time is different”? One of the “three Kevins” hopes so!
Good recap. Can’t wait for next episode of All My Kevins 📉📈💸
Someone doing the right thing? Maybe it will catch on!
For every Federal Reserve chair since 1970, their first policy move occurred at their very first FOMC meeting as Chair.
The first moves of the incoming Federal Reserve chairs since 1970 are heavily weighted toward raising interest rates, with only one historic exception (Arthur Burns) executing a rate cut out of the gate
The “Maestro” Alan Greenspan raised the discount rate from 5.5% to 6% in an early tightening action on September 4, 1987. But faced the historic Black Monday crash just two months later, swiftly pivoting to inject emergency liquidity, followed by various cycles of preemptive rate hikes and long-term accommodation through the 1990s and dot-com boom. Stock Market 1 Year Later: -21.2% (S&P 500 return 12 months after August 1987), heavily distorted by the catastrophic October 1987 market crash that occurred shortly after he took office.
In September 1987, an incoming Greenspan raised the discount rate right out of the gate to firmly establish his inflation-fighting credentials with a skeptical bond market. Critics argue that this rapid tightening sucked liquidity out of an already vulnerable financial system, heavily contributing to the Black Monday market crash just weeks later.
Warsh pushed through a rate hike despite immense pressure from the White House to cut rates. Like Greenspan in 1987, Warsh is deliberately signaling independence and an unwavering commitment to crushing stubborn 3.3% core inflation but ignoring that raising rates right now is a mistake because surging oil and diesel prices from the ongoing Iran war are already working to cool consumer demand. Forcing a rate hike on top of an energy price shock risks over-tightening and pushing a fragile economy into recession—the exact trap Greenspan walked into.
Who said history doesn’t repeat but rhymes or is it “this time is different”? One of the “three Kevins” hopes so!
I’m still puzzling over we will “look out the window and interrogate reality”