Powell Sees More “Pain” Ahead, Admits ‘Soft Landing’ Is ‘Out Of Fed’s Control’

Did Fed Chair Powell just jump straight from ‘denial’ to ‘acceptance’ on his journey through grief at the death of ‘transitory’ inflation?

Speaking on MarketPlace Radio this evening, Powell said the central bank has both the tools and resolve to bring down rapid inflation — though he acknowledged that the path to lower price increases could be a painful one.

Powell: So you can see that inflation is just way too high here in the United States. And by the way, the same all over the world, really, the global economies all around the world have been hit by a series of inflationary shocks and, pretty much, I just came back from a set of meetings with central bankers from around the world, and we’re all facing the same kind of issues and the public are facing the same kinds of issues.

Powell: Some places worse, some places better. We’re facing different challenges, but then again our economy’s more fully recovered, they may be just behind us in time. But what would I say to that person? So I would say that we fully understand and appreciate how painful inflation is, and that we have the tools and the resolve to get it down to 2%, and that we’re going to do that. I will also say that the process of getting inflation down to 2% will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels, and we know what that’s like. And that’s just people losing the value of their paycheck to high inflation and, ultimately, we’d have to go through a much deeper downturn. And so we really need to avoid that.

While many walked away from last week’s Fed presser believing that Powell had taken 75bps ‘off the table’, some might argue that his comments during tonight’s interview just put it back on the table…

“If things come in better than we expect, then we’re prepared to do less,” Mr. Powell said.

“If they come in worse than when we expect, then we’re prepared to do more.”

Then he poured cold water on the idea of a ‘soft landing’ that so many asset-gatherers and commission-rakers are constant telling investors is likely:

“There are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so,” Mr. Powell said on Thursday.

“So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”

I have said, and I will say again that, you know, if you had perfect hindsight you’d go back and it probably would have been better for us to have raised rates a little sooner. I’m not sure how much difference it would have made, but we have to make decisions in real time, based on what we know then, and we did the best we could. Now, we see the picture clearly and we’re determined to use our tools to get us back to price stability.

Funny that! We seem to remember a bunch of digital dickweeds screaming that this was anything but transitory in May 2021

It seems Powell really does want to control inflation by crashing stocks… and if you doubt it, read on:

Ryssdal: I need you to roll with me on this last one. We’ve got a little game we play on the show. It’s called “What is Jay Powell thinking in five words or less?” And I ask our Friday afternoon panelists when we have a big monetary policy topic come up, I say, “OK, what is Jay Powell thinking in five words or less?” And I would not be able to forgive myself if, sitting across from Jay Powell, I don’t ask Jay Powell what Jay Powell is thinking in five words or less. I should tell you I did this with Obama and he blew it. He went on for like a minute. So, no pressure.

Powell: Five words or less. I’m gonna go with what I really am thinking is, “get inflation back under control.”

Pumping money back into the system is the fatal error of Keynesian Economics. Those who do it know what they are doing: exploiting the common thinking that more money will cure the problem when actually they are doing it to tear down America.

From this article:

https://www.investopedia.com/terms/k/keynesianeconomics.asp

“Keynesian economics represented a new way of looking at spending, output, and inflation. Previously, what Keynes dubbed classical economic thinking held that cyclical swings in employment and economic output create profit opportunities that individuals and entrepreneurs would have an incentive to pursue, and in so doing correct the imbalances in the economy. According to Keynes’s construction of this so-called classical theory, if aggregate demand in the economy fell, the resulting weakness in production and jobs would precipitate a decline in prices and wages. A lower level of inflation and wages would induce employers to make capital investments and employ more people, stimulating employment and restoring economic growth. Keynes believed that the depth and persistence of the Great Depression, however, severely tested this hypothesis.”

In this article there is more information:

https://fee.org/articles/henry-hazlitt-and-the-failure-of-keynesian-economics/

“In his book, The General Theory of Employment, Interest, and Money and other works, Keynes argued against his construction of classical theory, that during recessions business pessimism and certain characteristics of market economies would exacerbate economic weakness and cause aggregate demand to plunge further.”

“Government deficit spending would provide additional market demand, pushing prices up and stimulating more hiring. Public-works projects would “prime the pump.” This policy would continue until “full employment” was attained. But since, in Keynes’s view, businessmen were usually shortsighted and irrational in their fears about investment prospects, the private sector would always lag behind in creating jobs. The government would have to be constantly at the monetary and fiscal controls, injecting spending into the economy to prevent it from sinking back into unacceptable levels of unemployment.”

And, the above article examines Henry Hazlitt’s 1959 book The Failure of the “New Economics” which was a chapter-by-chapter dissection of the arguments in Keynes’s General Theory. It is here we discover the failure of Keynesian Economics”

“Indeed, in a series of chapters, Hazlitt clearly showed that Keynes was confused about the actual relationships among savings, investment, and the rate of interest. The core of his theory was founded on a bundle of errors and mistakes. This resulted in Keynes’s failure to comprehend that saving, investment, and capital formation—not government-stimulated increases in aggregate consumer demand—are the foundations of sustainable employment and rising standards of living.”

After reading these two articles, we should understand the peril the Dems are taking the United States—and the world!

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