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Trader: Powell Has A Plan. There’s Just One Problem…
By Kevin Muir of “The Macro Tourist” fame; reposted here with permission
It’s never easy being a central banker. Too many of us, with the benefit of hindsight, look back and proclaim judgment on policies they took (or didn’t take) often forgetting that the future is never easy to predict. I am by no means innocent of this charge. I take potshots at central bankers all the time without consideration of the difficulty of their jobs.
Even the most revered central banker in history, Paul
It is substantially more risky and disordered than this article, full of invalid analogies purports. First compare the magnitude and impact of derivatives in 1973 and today. Further, the eurodollar system has grown in structure and importance far beyond the comprehension and ability to model that Keynsians posses. Only someone with deep intuition and a feel for complex systems stands a chance of pulling of the required multidimensional strategy to achieve the Fed dual mandate. That is with a political context of forces feeling the need to eliminate the FED. When things get chaotic the finger will be pointed straight at Powell but remedies will be elusive. This unhealthy set of affairs will lead to other dislocations in the global economy. If you really think that hikes and linear balance sheet runoff address optimization in today’s world with an unmeasurable eurodollar system, you are dreaming. But Trump and a lot of traditional rhetoric seem to be….a bad dream.