Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
THEY DON'T RING THE BELL AT THE CRPTO MARKET TOP! - 20th Dec 24
CEREBUS IPO NVIDIA KILLER? - 18th Dec 24
Nvidia Stock 5X to 30X - 18th Dec 24
LRCX Stock Split - 18th Dec 24
Stock Market Expected Trend Forecast - 18th Dec 24
Silver’s Evolving Market: Bright Prospects and Lingering Challenges - 18th Dec 24
Extreme Levels of Work-for-Gold Ratio - 18th Dec 24
Tesla $460, Bitcoin $107k, S&P 6080 - The Pump Continues! - 16th Dec 24
Stock Market Risk to the Upside! S&P 7000 Forecast 2025 - 15th Dec 24
Stock Market 2025 Mid Decade Year - 15th Dec 24
Sheffield Christmas Market 2024 Is a Building Site - 15th Dec 24
Got Copper or Gold Miners? Watch Out - 15th Dec 24
Republican vs Democrat Presidents and the Stock Market - 13th Dec 24
Stock Market Up 8 Out of First 9 months - 13th Dec 24
What Does a Strong Sept Mean for the Stock Market? - 13th Dec 24
Is Trump the Most Pro-Stock Market President Ever? - 13th Dec 24
Interest Rates, Unemployment and the SPX - 13th Dec 24
Fed Balance Sheet Continues To Decline - 13th Dec 24
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is Powell Bent on Wrecking the US Economy?

Interest-Rates / US Federal Reserve Bank Sep 26, 2022 - 09:58 PM GMT

By: MoneyMetals

Interest-Rates

Federal Reserve chairman Jerome Powell has taken a turn to the dark side.

After years of pleasing everyone on Wall Street and in Washington, D.C. with ultra-loose monetary policy, Powell has, for now, decided to recast himself as the villain. He now seems intent on crashing markets, killing jobs, and driving the economy into a deep recession in the name of fighting the inflation he helped unleash.



“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy does not work for anyone,” Powell said in remarks last week following the Fed’s triple-barrel rate hike.

He added, “The longer the current bout of high inflation continues the greater the chance that expectations of higher inflation will become entrenched.”

Powell also suggested that getting out in front of inflation is more important than trying to engineer a soft landing for the economy. Effectively, he has given up on dodging a recession.

The only question is how severe it will be. Since Fed policy decisions typically take at least three months to work their way through the economy, things could get significantly worse heading into the end of the year.

This is the same Fed chairman who just a year ago was insisting inflation was transitory and abjectly refused to do anything to curb it. Earlier this year, he insisted the economy was strong and wasn’t in danger of tipping into recession (which it has according to the standard textbook definition of recession).

Almost nobody expected the Fed to keep hiking rates this quickly or overshoot the 3% level, and stocks, bonds, currencies, and real estate are now all flashing warning signs of a financial crisis.

Central banks supposedly exist to help stabilize the economy and dampen the effects of booms and busts. But the Fed under Jay Powell is amplifying the boom-and-bust cycle by first pumping the up economy with excess liquidity, then hastily trying to drain it out.

Wharton professor Jeremy Siegel blasted Fed policymakers during a CNBC interview last Friday:

The last two years [are] one of the biggest policy mistakes in the 110-year history of the Fed, by staying so easy when everything was booming.

When we have all commodities going up at rapid rates, Chairman Powell and the Fed said: 'We don't see any inflation. We see no need to raise interest rates in 2022.'

Now when all those very same commodities and asset prices are going down, he says: 'Stubborn inflation requires the Fed to stay tight all the way through 2023.' It makes absolutely no sense to me whatsoever.

Why do Fed policies seemingly make no sense? Do Fed economists know something the rest of us don't?

Perhaps they are worried about a global energy crisis and food shortage and are desperately trying to curtail demand for commodities.

It's unlikely, though, that central bankers are exhibiting any special economic foresight. They have consistently been wrong over the years when it comes to anticipating major economic events such as recessions, inflation outbreaks, and financial crises.

What is clear is that Jerome Powell and company were tired of being disrespected by markets.

The Fed felt it needed to restore its credibility on inflation and show investors that they can’t count on the printing press to lift equity markets every time they dip.

The Fed was also tired of being taken for granted by deficit-spending politicians. Congress and the Biden administration have assumed that artificially low borrowing costs and Fed bond-buying sprees would let them off the hook in perpetuity for pursuing fiscally reckless policies.

The Fed is ultimately empowered by Congress. And Powell may soon discover that further rate hikes are politically untenable.

As the Fed-fueled boom turns into a Fed-induced bust, central bankers will find themselves behind the curve on monetary policy, as usual. And just like so many times before, they will abruptly reverse course and start the boom-bust cycle all over again.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2022 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in