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Nathaniel bonner into the wilderness6/16/2023 The Covid Crisis caused the Fed to do a lot more of what it never should have been doing in the first place – printing money. Share Bonner Private Research Piles of Cash No way out.Īnd the catastrophe is underway… whether he acts or not. He is, after all, a big city lawyer, lost in a Yellowstone of finance. He clearly doesn’t know what he is doing. It almost makes us feel sorry for poor Jerome Powell. The minutes said “many participants” at the Fed's meeting in March noted they would have preferred a 50 basis point increase to the federal funds rate in light of high inflation. The Federal Reserve is ready to raise interest rates at a faster pace to get a handle on America's pervasive inflation problem, according to minutes from the central bank's March meeting released Wednesday. “Accordingly, the committee will continue tightening monetary policy methodically through a series of interest-rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”Īs of late yesterday afternoon, the Fed was bound and determined to do what needs to be done – and less! Here’s CNN: Brainard said Tuesday at a virtual conference hosted by the Federal Reserve Bank of Minneapolis. “It is of paramount importance to get inflation down,” Ms. One way or another, to get inflation under control, the Fed will need to push bond yields higher and stock prices lower.Īnd here’s another leading Fed voice, Lael Brainard, as reported by the Wall Street Journal: This would mean hiking the federal funds rate considerably higher than currently anticipated. If this doesn’t happen on its own (which seems unlikely), the Fed will have to shock markets to achieve the desired response. ![]() Investors should pay closer attention to what Powell has said: Financial conditions need to tighten. Here’s Bill Dudley, former inflation dove… now suddenly sporting sharp claws: Still, Powell’s compadres at the Fed press him to show a little courage. After bumbling for so many years, there is no chance that the Fed will ‘get it just right.’ Nor is it possible that genuine tightening wouldn’t ‘affect the actual economy.’ In any event, this process will cause lots of consternation and very volatile markets,” Dimon wrote. “If the Fed gets it just right, we can have years of growth, and inflation will eventually start to recede. told investors he did not envy the Fed for the steps the US central bank would need to take to end its ultra-loose policies but urged it not to “worry about volatile markets unless they affect the actual economy”. Here’s JPMorgan chief, Jamie Dimon, in the Financial Times : But both from within the Fed and from the outside world, come hallucinations of successful surgery. Does he have the stomach for it? Could he endure the pain? In order to escape his trap, Jerome Powell needs to cut away 14 years’ worth of bad policy. The next day, he took out his penknife and hacked off his arm, saving his life. Then, near death, he had a vision of himself alive… but missing an arm. He may break a leg… or like Aron Ralston in 2003… may get his arm pinned by a falling boulder. Occasionally, a trapper or hiker will get stuck in the mountains, far from civilization. If, on the other hand, he lets inflation rip, the dollar will die… bringing with it financial, social and political chaos. The Fed needs to stop printing everybody says so.īut if Powell fights inflation, the economy will collapse it depends on ultra-low interest rates and free-flowing credit. Inflation has already returned to levels not seen since the 1970s. ![]() And now he is caught… trapped, between the inflation he created… and the reckoning he was desperate to avoid. A city slicker in the financial wilderness… with no compass to guide him, other than the Fed’s silly models and claptrap theories… he got hopelessly lost. ![]() Like Law, Jerome Powell has made a huge mess of things. Not since John Law slipped out of Paris in 1720, leaving in the dead of night to avoid an angry mob, has there been anything like it. Whatever else can be said about it, this must be one of the most interesting and entertaining chapters in the history of central banking.
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