Ignoring the 800-pound gorilla won’t make him disappear.

To let the financial media and the Wall Street rank and file tell it, Jerome Powell decided this week, of his own accord, that “the shifting balance of risks,” and particularly the prospect of an abrupt deterioration in a “curious” US labor market, make a compelling case for a resumption of rate cuts at the September FOMC meeting.

That current policy settings remain moderately restrictive even after 100bps of cuts since this time last year likewise argues for cautious easing, Powell reckons. After all, downside risks to employment can “materialize quickly,” as he put it in his final Jackson Hole address. God forbid the Fed and its Chairman should be “too late” to act.

All of that’s true. But not.

Policy rates probably should be as close to neutral as it’s possible to bring them with allowances for the, um, difficulty of aligning rates with an abstract concept. Although I enjoy arguing the contrary, I tend to believe Fed funds is at least 50bps above neutral currently, and if sustained, I think hindsight would show the Fed misjudged the risk-reward tradeoff. In short, I think the Fed, in persisting in policy restriction, is risking more on the employment side of the mandate than it’s getting in the way of inflation deterrence on the price stability side.

Do tariffs pose upside inflation risks? Sure. Particularly in the near-term. Is the Fed doing anything to preemptively mitigate those risks by keeping rates a half-point higher than they might be in the absence of aggressive protectionism from The White House? No. Almost surely not. And let’s not forget: If corporates misjudge consumers’ capacity to absorb tariff-related price hikes, tariffs could pretty easily become deflationary through the demand destruction channel.

So, it’s not “wrong” to view Powell’s Jackson Hole speech through that lens. But let’s not kid ourselves: If you strip away the discussion of the five-year policy review (which was interesting in its own right), Powell’s speech was more or less a verbatim recitation of his 2025 tariff talking points. He didn’t pivot dovishly. He read the same script he’s been reading for nine months with two tweaks:

1. a strained attempt to hold up the in-flux character of the US labor market as plausible deniability for a rate cut he plainly isn’t sold on, and
2. a laughably wooden, caveat-heavy closing sentence suggesting the totality of current circumstances “may warrant adjusting our policy stance”

That begrudging concession — Powell’s nod to “adjusting” rates in September — sounded every bit like it was written by a man being held at gunpoint. Because it was. Powell’s under the gun.

On Friday, as Powell spoke in Jackson Hole, Donald Trump gave Lisa Cook an ultimatum: Resign from the Fed Board or be fired for cause. That cause: Mortgage fraud, as alleged by FHFA director Bill Pulte. Pulte was the architect of the scheme to remove Powell in connection with cost overruns for ongoing renovations at the Eccles building, and critics worry he’s transforming America’s housing watchdog into an extension of Pam Bondi’s Justice Department. If Cook goes, Trump will have a de facto majority on the Fed Board.

Around the same time Trump menaced Cook, FBI agents raided John Bolton’s home. To be absolutely clear: I despise Bolton. In my not-always-humble opinion (and with apologies for the crude language), John’s a piece of sh-t. War hawks I can suffer. War mongers, like Bolton, not so much. It should also be noted that the FBI went through the proper motions and followed protocol before searching Bolton’s residence and offices, or at least it appears they did.

But — BUT! — John’s on Kash Patel’s infamous “deep-state” list — the inventory of alleged bad actors which appears as an addendum to Patel’s 2023 book, Government Gangsters. The Amazon page for Gangsters includes a glowing review from one Donald J. Trump, who called it “a brilliant roadmap” and promised to “use this blueprint to remove these Gangsters from all of Government!”

Again, I have no problem with the assertion that Bolton should be locked out of national security matters the same way you’d implement a no-exceptions ban on chimpanzees in the NORAD command center. And if he’s in possession of sensitive foreign policy documents, we do indeed need to remedy that situation, and posthaste. If I have to trust someone with foreign policy, and particularly with matters of war-making, and (God forbid) my only choices are Trump and Bolton, I’m going with Trump every, single time.

And look, if Cook committed mortgage fraud, then she committed mortgage fraud. If it’s that black and white (sorry), then so be it. She’s gotta step down. Personally, I think it’s exculpatory that an estimated 22,000 people were similarly “guilty” from 2005 to 2017, according to the Fed’s own estimates, but… well, just because countless people were guilty of petty theft in 2024 doesn’t mean I can steal a granola bar next time I’m standing in the Target self-checkout line with no employees of any kind anywhere in sight.

That said, and with all due respect to the argument that insists Trump and his allies were pursued relentlessly, and in at least some instances, illegitimately, by America’s law enforcement and intelligence apparatus, it does us no good as a society to pretend this is something other than what we all know it is. Trump’s brand of lawfare is like everything else to do with Trump: Uniquely Trumpian. And in this case, that means flagrantly, blatantly autocratic.

Coming full circle, it’s no less obtuse to ignore the circumstances while pronouncing upon Jerome Powell’s “voluntary,” “data-based” pivot to a cautious easing bias than it would be to pretend that a monetary policy shift in any other autocratic state (soft, transitional or otherwise) is somehow unrelated to the threat of authoritarian retribution.

Again: Ignoring the 800-pound gorilla won’t make him disappear.