Jerome Powell could begin to fix the mess he helped create even if it might upset the markets for a bit. He could raise short-term …
Jerome Powell could begin to fix the mess he helped create even if it might upset the markets for a bit. He could raise short-term interest rates higher than investors have priced in and announce that inflation is so bad that the Fed will significantly reverse the size of its balance sheet. Of course, Powell won’t do that when he unveils his new interest-rate policy Wednesday because in doing so he would have to admit to one of the biggest monetary-policy blunders in recent history. It was Powell who promoted the panacea of “ transitory inflation .” As we all know now, it was a cynical PR stunt designed to fool the American people that there would be no consequence to his historic money printing (in the trillions), low-interest rates and support of President Joe Biden’s trillion-dollar spending sprees well past the time that COVID was squeezing growth from the US economy. Talk about cynical: The “transitory inflation” meme also helped Powell win Biden’s blessing and reappointment to another term as Fed chair since it helped the president sell his spending plans until Sen. Joe Manchin said enough. Enough should have happened sooner, of course. Between the money spent by Biden that literally paid people not to work and the dollar printing by Powell, our Fed chair is now finding himself in the tightest of tight spots.
