Way, way, way back in history, I penned an article and a warning:
In that piece I stated the following:
The lack of disciplined individuals with a deep understanding of monetary policy and cycles within supercycles provides the weak and easy out of just gambling on the “inflation will burn itself out” theory of economics, first tried in the 1970’s. Thus there will be no more rate increases as long as Powell remains the Fed Chairman.
This is the cost of not having economists or experienced bankers on the FOMC and soon America will learn that the price will be one more inflationary impulse; one strong enough to crash the economy and demand further while creating a societal and political nightmare in 2024.
I stand by that statement from the not so way back era known as June 15th of this year.
Instead of a gradual 25 basis point increase nudging rates slightly higher, which markets could easily have absorbed, they feigned the 1970’s “we got this” strategy and paused. Of course this triggered the usual Bubblevision visual orgasm where the bulls repeated ad nauseam that Powell was done hiking and for the remainder of the summer the mantra was “soft” or “no” landing.
After all, the waste and froth in the system is gone, right?
Okay, maybe not. The Fed has made sure that the speculative frenzy on garbage stocks and some questionable IPOs continues to this day. Yet Powell and his political sycophants continue to try to convince themselves and others that inflation is under control and moderating and all is well.
Maybe he should tell the Atlanta Fed that then before they publish their version of CPI:
Doesn’t look too contained to me. Maybe in California today inflation was contained?
That’s right, gas for the commoners isn’t inflationary and the government said they need electric vehicles anyways.
Of course it is a good thing the government is spending all this money to keep the economy chugging along like that, isn’t it?
Thus why I think the Federal Reserve Open Market Committee (FOMC) will blunder even worse today.
There is no indication that the insane spending by the boozed up losers in Congress will ever be restrained. Hence, no matter how much Powell thinks he is reigning in inflation, the truth is he needs more inflation to pay off that debt with depreciating dollars or there will be a day of reckoning for the government sooner, rather than later.
The predictions for the FOMC meeting tomorrow are pretty standard fare (thanks to Gurgavin for posting this, it saves time looking through all the services):
I’m hoping that Raymond James and Mizuho are correct, even though it would jolt equity markets.
However, there is no honor among thieves and lawyers so with that group in control of the Fed, look for nothing to happen other than some allegedly strong language. Then the risks really begin to mount as an oil driven inflationary surge begins to hit the economy along with some huge geopolitical events creating problems throughout the Western economic bloc.
This is why I bet on another blunder, another failure to contain inflation, and some terrifyingly panic moves from the world’s central banks during the winter months which will only make things much, much worse.