On Thursday’s broadcast of the Fox Business Network’s “Kudlow,” Breitbart Economics Editor John Carney said the Federal Reserve is “scared to death” of deflation.
Anchor Larry Kudlow said, “I’m just saying, there is nothing wrong with this? I’m say I think we’re headed for a bought of deflation and there is nothing wrong with a bought of deflation.”
Carney said, “Especially the inflation we just had, people will take deflation later this week. We had so much deflation taking back some of those price hikes would be a relief.”
He continued, “The market is sending a pretty insane message. Right now it is pricing in seven rate cuts next year. That’s really, really exuberant. If the fed cuts seven times next year in a an election year they will be instantly accused of trying to fix the election. I think they will stay away from that. I think the market has as you said it, gotten over exuberant here. They have gone too far. What’s weird if the market believed there would be a deep recession, seven cuts are easy next year but instead we’re getting this weird thing where people are predicting no, the economy is going to be fine, we’ll grow 1 1/2, maybe 2% next year and the fed will cut at every meeting other than January. Right now they’re pricing in 60 to 70% chance of a cut in March. That is two meetings away, three month from now. they’re saying we’ll have a cut in March. I don’t get it.”
Kudlow said, “The fed ought to let a little deflation happen.”
Carney said, “The fed is totally upside down, they have a asymmetrical approach when should be going the other way. They should be very worried of inflation and not at all worried about deflation. Instead they’re scared to death of even a slight downturn and they seem willing to let inflation happen. That is why we got high inflation the first players and they’re making the mistake again.”
Follow Pam Key on Twitter @pamkeyNEN
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