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Jerome Powell Tells Lawmakers He Wants The Fed To ‘Stay In Its Lane’ When Asked About Tariffs
Ahead of Jerome Powell's testimony on Capitol Hill Tuesday, markets were listening intently to see i
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Some points:
Of course Powell feels like “he’s walking on egg-shells”. He knows damn well that any verbal misstep will be jumped on by an hysterical MSM – and even by thoughtful bloggers – to hit the guy who appointed him around the head. Actually, that’s the tenor of this post: ‘Damn the man, he didn’t give us any ammunition to aim at Trump’.
As for the ‘independence’ of central banks:
a. Why in hell should they be independent? They exercise a major public policy role which should be democratically controlled. If monetary policy has to be ‘independent’ because we don’t trust our elected public officials, then why not have independent fiscal policy, independent defence policy, and independent foreign policy? In fact why bother with elections at all – especially as the Russians apparently hack everything, everywhere, all the time?
b. Central banks have anyway never been fully independent of political influence in either their senior appointments or their policy-making, and they are certainly not independent of regulatory capture by the commercial banks that many (not all) are charged with supervising.
c. Since central bank ‘independence’ threw away its training wheels in the 90s these guys (and the occasional gal) have given us three massive asset bubbles and a global credit expansion whose demise will irreversibly change the structure of our economies and societies. They should never have been given the keys, and they’re now driving severely impaired under the influence of hubris and groupthink.
The Fed wants to be blameless for this economy now?
“I’ve often quipped that we’re just a few thousand Dow points to the downside away from Trump adopting the Erdogan strategy when it comes to monetary policy.”
This is the truth. Trump’s motivations, just like many of his cronies, will always ultimately come down to the (substitute: “his”) pocketbook. MAGA is a ideological front piece. I still say that it is going to ultimately come down to the NASDAQ. That’s going to be the red light. Any interest rate latitude will always be exploited, now that we’ve established historical precedent in its (over) use. It’s always going to be the go to drug of choice,
On the other hand, this whole trade thing might very well just be political posturing.