Powell And The Fed Gave Voters The One Finger Salute
Powell and his team at the Fed decided to ignore the voter angst that gave Trump a landslide victory. Voters were pretty clear that they aren’t happy with the jobs market and the economy aka the real world that voters have to deal with every day.
Instead of going with another half-point cut to show they are somewhat concerned about causing a hard landing, they went with a meaningless quarter-point cut.
When asked in the press conference about the election, he had no comment. The press asked if he would resign if Trump asked for him to, he had a stern one word answer of no. They also asked if Trump could replace him if he wanted to and he was quick to answer no, that it was against the regulations.
He sure sounded angry to me and like he had some uncomfortable calls with Trump’s team and wanted to send the message he will keep doing it his way, regardless of what they want.
I can imagine that Trump heard the voters' message that they aren’t happy about the jobs market and economy. I’m sure he got the memo that despite the fake government statistics on jobs and the economy that there is a real possibility that he could take office as a recession is about to start. Or even stagflation.
A half-point cut with messaging that there are more to come would help Trump get a more positive real economy when he gets in. But, Powell and his team were having none of it.
A quarter-point cut does nothing to help the real economy. Powell wasn’t even very enthusiastic about pitching the fake government economic stats.
Meanwhile, Biden and Harris will keep spending as long as they can until they have to pass the baton. Which means the Death Spiral of Debt keeps getting worse, as does the cost of servicing the debt which is not helped by a quarter-point cut. To make a difference on that front, they need to get rates back toward the Free Money Era.
Of course another issue that has risen up since he cut rates, the bond vigilantes have gone on a buyers’ strike driving yields up. So, the Fed better hope that they haven’t thrown workers and the economy under the hard landing bus. Otherwise, he will be forced to slash interest rates and crank up their balance sheet. Their tepid action today on interest rates brought that closer to reality,
Listening to Powell answer questions at the press conference reminded me of some of the videos going around X.com of super angry Harris supporters. Sure he didn’t come with the same histrionics, but for a guy that usually has no issues answering questions with details, his one word terse answers sure didn’t give the impression he was happy.
The good thing about his press conference was that at least he didn’t have any enthusiasm to pitch the Goldilocks economy narrative based on fake government statistics. That would have been a serious slap in the face to voters that have to live in the real world.
The Death Spiral of Debt will continue unabated because as the pile of debt keeps growing, so does the cost of servicing the debt with rates above 5%.
Powell’s dithering, is putting a hard landing of the economy into play early in Trump’s term. Maybe that is what Powell and his cronies want.
Game on for gold,
Allan Barry Laboucan
Would you prefer that Chair Powell said yes I will resign if asked to do so? That would signal an end to central bank independence, causing a bond selloff and higher interest rates.
One theory is they’re still putting the screw to Europe.
Another is the one mentioned here. Basically let all these right-wing victories occur and blow up the global economy in an attempted grand association of national sovereignty & deregulation with financial crises & impoverishment (both of which have been in the pipeline for a long time regardless).
Then back on track for Agenda 2030? Might be the gambit. Time will tell.