Consider the Source

Last week a new study concluded that the Federal Reserve Bank cost the economy millions of dollars by raising interest rates before the economy was ready, doing so to prevent prices and wages from rising too fast but instead putting a damper on investments that would have created jobs.

The Curmudgeon isn’t an economist and has no idea if this is true but he’s not buying this bit of “research” even a little.

Why not?

Because it was done by Moody’s, the bond and stock rating company.

Moody’s, you’ll recall, was giving very high ratings to companies that were failing or dying slow, painful deaths during the recession of 2008-2010.

Time after time Moody’s gave “buy” ratings to the stocks and bonds of companies that were in financial freefall.  Why?  Because those companies paid Moody’s to rate their stocks and bonds and the “analysts” – you really need to put that word in quotation marks because they’re more sales people than analysts – were afraid that if they didn’t give the companies good ratings they would take their business elsewhere.  They especially turned a blind eye toward the mortgage securities that many investment companies own and that played an enormous role in the recession; for a surprisingly clear (and entertaining) explanation of how that happened, see the 2015 movie The Big Short.  Moody’s paid a fine of nearly a billion dollars for its dishonest work – a sum that didn’t even begin to cover the damage that bad work wreaked on the world economy.

So when the folks at Moody’s have anything to say about the economy or a company or pretty much anything, you have to consider the source and either dismiss their views entirely or at least take them with a grain of salt.


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