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The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts

Weakness in commodities "is not transitory," Art Cashin tells CNBC, if you look at things like copper, "this is really a deflationary push... where things can get a little out of control." The Fed says they must get off zero interest rates because,, as Cashin notes, "they can't do anything else." However, as the venerable floorman who has seen it all explains, "they're in a kind of silly loop where they did QE expecting a reaction... didn't get it.. and then they did QE again because it didn't live up to their expectations... but I think they have no other options, if things get negative on the economy, QE is all they can do."

Which is exactly what we said a month ago...

GUNDLACH SAYS IF FED TIGHTENS, WILL HAVE TO CUT AGAIN. Actually it will have to do QE4 which is the whole point

— zerohedge (@zerohedge)

Even the CNBC anchors realize the folly of Fed ways now, noting "but aren't they just pushing on a string?" Indeed they are and as Scotiabank's Guy Haselmann noted earlier, it will cost us...

Fed policy today and over the past several years may prove to be counter-productive in the long-run.

 

Sustainable growth is best served by an interest rate where capital is deployed efficiently.  The long-run consequences of policy during the past few years could easily mean lower long-run potential growth and inflation.  Today’s consumption and market speculation was paid for with huge amounts of accumulated debt. 

 

Tomorrow’s revenues will have to be steered toward servicing that debt.  Future revenue will also have to replenish the deficient levels of R&D and infrastructure investment of the past few years.

Cashin explains The Fed's bind...

 

h/t Lesley M