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The Dollar Post-Fed Pivot (And Other Musings)
I guess I don't have to say this, but the dollar is poised to be a hot topic going forward.
I've variously suggested the June FOMC wasn't in itself a "momentous" game-changer, but I'm apparently in the minority on that view. In fact, I was starting to think I might be totally alone in that assessment, and while isolation certainly isn't new to me, I'll confess I was relieved when TD's Priya Misra said, on Friday, that in her view, "the hawkish shift was more a function of the Fed’s risk manag
I can’t say that I am surprised; the social justice mandate may have provided excellent cover for easing, but capital will always look to its own needs first (and usually, last and in between to boot).
Frankly, it was never very credible for the Fed to take a “social justice mandate”… Sure, they can ignore inflation while trying to bring unemployment as low as humanely possible but even that wouldn’t really guarantee social justice. I mean, full employment would help, of course but we’ve had bouts of full(ish) employment in the last 20 years and inequality keeps on gapping up… The problem is political.
As long as enough people can be convinced that the system is fair, “everyone gets his/her shot” and the poor deserve their fate, nothing will change. And “enough people” doesn’t even have to be a majority given the numerous veto points in the US institutional set-up.
So yeah – I acknowledge that Biden is a break from the last 20 years (Bush II who favored the rich anyhow, Obama who was effectively paralyzed and Trump who favored the rich anyhow) but it’s far from clear he can reverse inequality. Even if he decides to spend tons of money, his ability to get it passed by Congress isn’t clear and his ability to raise taxes is even more questionable.