Sunday, September 27, 2015

Jared Collins: Predictions of a September Crash Fade

In a recent blog article on his site, Jared Collins looks at the recent Fed decision not to raise rates and suggests this may indicate the US Fed is now willing to look beyond US borders in making its decisions. He also notes that the crisis conditions many were predicting for September have not come to pass so far.  Below are some quotes from his article.

"With the announcement by the Fed today of no interest rate increase, the hopes and fears of a September crash recede into the background noise from which they came.  What we can expect is the same slow grind of deflation and modest volatility leading into the fall and winter months.  Though nothing the Fed said today would indicate that a rate increase is off the table for 2015, and could still take place in December.

The international demand on the Fed not to raise rates was coming from all sectors and regions, including the Bank for International Settlements, IMF, World Bank, China, and various other central banks and institutions.  With a level of domestic justification for a rate increase, quantified by previous Fed statements on inflation and employment levels over the last few years (all of which have been reached), it can be assumed that the lack of international justification and support influenced today’s decision.

With the restructuring of the international monetary system high on the agenda of the global institutions, it is probable that the decision by the Fed today is signaling that the US is in fact willing to negotiate and facilitate the development of reforms.
The deadline for the 2010 Governance Reforms has come and gone with little fanfare.  The framework of Plan B reforms is scheduled to be determined by Sept 30, and implemented by December 15th.  This timeline would correspond with the next FMOC meeting and decision on rates."

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