Tag Archives: powell

Federal Reserve Needs to Manage Mortgage Rates – Raise Your Hand If You Agree

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CPI used by Federal Reserve rose slowly. 2021 – 7.6% 2022 – 6.3%

But Median Home Price (Inflation) rose faster. 2021 – 18% 2022 – 13%

The problem is the Fed was watching the CPI and not looking at housing prices which rose a lot faster. That resulted in similar large rent increases. Powell and the Fed did NOT recognize the need to raise rates UNTIL January 11, 2022.

Solution 1: Have Congress give the Federal Reserve the mission of controlling mortgage rates in conjunction with housing inflation. OR

Solution 2: Combine the Federal Student Aid, Fannie Mae, and Freddie Mac agencies into the new Federal Loan Administration and have it set rates in conjunction with the Federal Reserve for student and housing loans. Student loan rates and mortgage rates would rise as demand rises or as prices rise. Likewise they would go down independently of the Fed Funds Rate as demand goes down or as prices drop.

FOMCGPT Is Better Than FEDERAL RESERVE

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Federal Open Market Committee (FOMC) sets policy for the Federal Reserve.

Data to Monitor Once A Month \\ 50 Plus Year Average \\ Acceptable Range

  1. Consumer Price Index YOY (CPY) Avg 3.8% Range 3%-5%
  2. Case Shiller Home Price Index YOY (HPY) Avg 5.29% Range 3.5%-7%
  3. Unemployment Rate (UR) Avg 5.73% Range 4.5%-7%

Tools Available

  1. Raise/lower Federal Funds Rate if CPY is too high/too low
  2. Raise/lower Federal Mortgage Rates if HPY is too high/too low
  3. Raise/lower Quantitative Easing if UR is too low/too high
  4. Auction Off Troubled Financial Institutions

Financial Institution Tests

  1. Uninsured deposits / domestic deposits < 50%
  2. Loans and held-to-maturity securities / total deposits  < 50%
  3. Financial Institutions that fail both tests for two consecutive quarters are auctioned off.

RESULT: No peer pressure, no human error, no recessions!

FOMCGPT(tm) To The Rescue!

A ChatGPT bot (FOMCGPT) has been designed to generate Federal Reserve policy once a month incorporating the algorithm above using easily modifiable configuration files. It is being tested using Federal Reserve FRED data from April 2021 to April 2023.

Fed Powell Texts Mid-Size Bank Presidents – “Hey, Are you guys solvent?”

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HEY WANT TO KNOW A SOLUTION?

https://www.barnesandnoble.com/w/the-assassination-of-too-big-to-fail-michael-e-kelley/1142968143