Türkçe
Español
As the Fed’s interest rate decision approaches in September, fluctuations in Bitcoin 
$86,585 prices indicate ongoing economic instability. Senator Warren has written a letter to Fed Chairman Powell, urging for a more rapid decrease in interest rates. She outlines her reasoning, emphasizing the need to act based on current economic data prior to the decision.
Letter to the Fed Chairman
In her correspondence, Senator Warren requests a 75 basis point reduction in interest rates. With interest rates reaching their highest levels in a decade and inflation continuing to decline, she argues for an expedited easing. Warren highlights that data reflecting a slowdown in employment growth necessitates action from the Fed.
“Given the Fed’s confidence in inflation decreasing, you must respond to the indicators showing employment stagnation. We have been urging you to lower the federal funds rate for months. As stated in our June letter, raising the Fed’s interest rates does not alleviate the remaining causes of the economic crisis.
High interest rates exacerbate housing costs. Your recent acknowledgment that it’s time to act encourages us, but you must address economic threats before it’s too late. Inflation has dropped to 2.5%, significantly below last year’s peak of 7% and just above the target.”
US Housing Loans
Warren points out that construction costs are contributing to housing inflation, signaling a troubling trend. According to The Kobeissi Letter, housing construction loans in the U.S. fell by 10% year-on-year in Q2 2024, marking the largest decrease in a decade.
In addition to the ongoing decline in construction loans over the past five quarters, new housing starts are also a concern. Without new supply, housing inflation will rise alongside the growing population. In July, new housing starts in the U.S. decreased by 16% year-on-year to 1.24 million, the lowest level in 50 months. There are growing concerns that housing starts will continue to decline throughout the year.
These factors contribute to the widening cracks in the housing market, adversely affecting inflation.
Economic Downturn Comparison: 2007 and 2024
The Fed made its first interest rate cut on September 18, 2007, when the unemployment rate was 4.7% (currently 4.2%) and inflation stood at 2.5%. Many current economic indicators are nearly identical to those in 2007. The accompanying graph illustrates the losses experienced by the S&P 500 following the rate cut. Crypto analyst Brett warns of the risks of repeating past performances, though he notes that such outcomes are not guaranteed.
Should history repeat itself, cryptocurrencies are likely to follow the S&P 500’s trajectory.
