This guy is really a piece of work. Fed Chairman Jerome Powell delivers remarks to the pontificating pustules at the DC Economic Club. Within his remarks, notice how Powell used the word “disinflation” to describe how prices are starting to drop in the “goods sector.”
Of course, durable goods are dropping in price, fewer consumers have any money to buy them. Yes, excess manufactured goods created by the disappearance of buyers will naturally lead to lowered prices by those who need to sell them. Our economic problem is not, and was not, ever an outcome of excessive demand for durable goods.
Our economic problem is the scale of energy price increases that are chewing through paychecks and driving up the costs of high-turn consumables like food.
Massive price increases for food, fuel, energy, electricity, home heating and natural gas eating up paychecks. There is no room for discussion about the next phone, refrigerator, or new car that might be needed. Simultaneous to ignoring this issue, Chairman Powell is giddy that wages are not rising. WATCH:
.
The process of bringing inflation down to the Fed’s goal of 2% over time “is likely to take quite a bit of time. It’s not going to be, we don’t think, smooth. It’s probably going to be bumpy,” Mr. Powell said Tuesday. “So we think we’re going to have to do further [rate] increases, and we think we’ll have to hold policy at a restrictive level for some time.” (WSJ Article)
Never has this cartoon been more apropos.
Is there anyone remotely connected to government that has an ounce of credibility left?
No. Maybe the janitor at the WH.
Literally LOL!
Money is still being poured into the system at an unprecedented rate. This won’t curtail until the effective Interest Rate approaches the effective Inflation Rate. The spread is much larger than anything we ever saw in the 70’s, that’s the direct consequence of the massive issue of FIAT MONEY (Fake Money). It’s very important for people to understand the deviousness of “Modern Monetary Theory.” I pick it as the main culprit of all our problems because it keeps the crooks in business so to speak. There’s never any day of reckoning. For example, if you don’t have Quantitative Easing you don’t have Joe Biden to begin with. Quantitative Easing is the source of all their power and control. They can buy people off through all levels of society wherever they need the influence. Advertising for example, is the largest Subsidized Industry in the United States – look what that’s done to the media.
I bet the Oil Companies were subsidized for shutting down their operations as another example – anything it takes for them to get what they think they want is what they’ll do with Easy Money.
The Fed does not set interest rates, it follows them, that’s really the posture they’ve been in ever since they started this aggressive Monetary Policy.
They haven’t been influencing the system, they’ve been milking it. They can’t do that anymore with visible inflation. See, interest rates are the biggest component of runaway inflation (and inflation is the biggest component of high interest rates). They can’t have the Burlesque of borrowing money at 4.75% Short-term Treasury Bill and lending it to the Banks at 0.00% Fed Funds Rate. That would be so preposterous it would just add fuel to the fire and the treasury market would be demanding even higher interest to buy the government’s securities. It’s sort of like how FTX shouldn’t have gone past a 30% reserve requirement. The Federal Reserve would be making the same mistake – they’re at the end of their rope.
I guess the Commies just want The Fed to do it anyway and you could have the fiasco of the government borrowing at 40% interest then turning around and lending to the Bankers for 0%.
I expect when that happens everyone will understand what they’ve done.
Cheers! from this standpoint Mr. Powell is accidently doing the correct thing.
Interesting. I always appreciate CTH posters perspectives on money..
Cheers!
I agree the fed has been milking it. Many believe it is part of the government since it has ‘federal’ in it’s name.
As Federal as Federal Express.
Or as Mr. Laffer says(paraphrased) “The interest rates need to double the inflation rate for things to move.”
Nice post. A few thoughts:
The Fed doesn’t set the Federal Funds Rate (the rate at which excess reserves are loaned interbank) . It influences it.
The Fed sets the Discount Rate.
There remains huge excess liquidity in the system – from both QE and absolutely off the chart Federal spending.
The Fed works with the tools it has. It can’t directly impact supply side problems other than, as you imply, through the cost of capital (interest rates).
The other Fed miscalculation, as you note, was the prolonged Zero Interest Rate Policy (NIRP if you like) . There appear to be interesting phenomena in after-thought ville: we know this has led to a large number of Zombie companies; we know there is a larger cash balance on many corporate balance sheets (which is not just revenue driven) – i.e., for whatever reason(s) corporations are not investing much of this cash at the moment; a lot of the zero interest cash was used to fund unproductive equity buy backs.
Supply side issues, including food, include black swan influences such as the Ukraine War, and the as yet un-examined destruction of food processing facilities and mass deaths (e.g., avian flu, cattle) .
There is likely a market manipulation aspect to all of this. Right when the Ukraine War was provoked, I invested in several fertilizer industry related companies. Prices for these equities have been volatile. In the end, they have not risen much (yes, I concede the rise/fall argument is easily manipulated by picking points in time; just reflecting on my experience).
The media is under-reporting Fed balance sheet actions.
Supply side issues have numerous causes: the pandemic and a brittle global supply system riven with single points-of-failure. As for energy, the deck was set when Petro CAPEX began a steep decline in 2013 and an even longer-term drop in construction of new refineries. Whether Climate Change driven or a legitimate but completely FUBAR energy transition plan, energy problems derive largely from policy; and, the Fed does not decide those policies.
The Fed has been a major source of inflationary pressure. No doubt about it. But it is not the only action agent in what has been, after all, a calculated, unimaginably large transfer of wealth. The Fed employs blunt tools to address inflation. We all know where the real blame falls.
Most likely, but they have neither authority nor power.
I just don’t bother to listen to the lies any more. Someone with lower blood pressure will have to listen to this idiot.
Fake Invasion. BBB is the mission. “is likely to take quite a bit of time.” As long as it takes.
Great day to trade, ES Futures made an intraday low, which it needed too, then broke upwards from 4108 to 4175, then down from 4175 to 4098, then back up for the close 4098 to 4187.
Just in case some might wondering.
Normally, I tend not to trade when J. Powell talks (Fed days) but today I did. Go figure.
Yep more than one Canadian major bank traded up today by around 1.25% the others around 1%.
A major oil sands producer here in Canada was up around 2.25%
Insider info is a useful investment tool 😎
Ditto. Options were priced high due to volatility. New something was going on besides the Fed interview. Put on a strangle and closed it profitably overnight. Put on another strangle before open and adjusted to neutral profitably after the extension above the initial balance. Closed the calls very profitably at 4100, which occurred in the first 5 minutes after the interview began at 11:40 CT, and closed the puts profitably latter on the move down. Stepped aside and missed another very profitable trade to the upside.
You are a brave man! Or well informed.
Pretending or genuinely ignorant?
If pretending it has to be a blow to his ego that people think he is an idiot.
If he is genuinely ignorant his ego has no idea people think he is an idiot.
I get the feeling “people” are not on his radar.
“People” is just another name for the dots on his charts and graphs.
For a chatbot, he’s very convincing. The moving lips. The likelike hair. Everything.
Impressive technology.
… the quiet, hushed tones of an effeminate male … like Alan Alda. Very non threatening … until you notice he’s just quietly, and psychopathically slit your throat and nothing will save you. He reminds me of an Economist Hannibal Lecter.
He’s a little garden gnome.
Joe Biden: “I built that!”
My credit score has been over 800 for well over a year.
About two months ago, I got a notification that the one credit card (a low interest bank Visa) I had a small balance on was going to have an interest rate increase of 2%. So I paid it off with a very low interest line of credit and closed the card.
I checked yesterday, and my credit score dropped 40 points within 4 weeks after I paid that balance off.
Their economic narrative line is not, “You will own nothing and be happy.”
Actually, their narrative line is, “You will be punished.”
No problem, Government. You never were God to me.
I AM WHO I AM Who is God hasn’t changed, so it’s all good.
If you don’t have debt, then your credit score will not go over 800. You must have consumer debt in order to achieve 800+
Thats not quite accurate, I am near 850 even after paying off mortgage and car loans.
Just have credit cards they WISH I would forget to pay off. 🙂
If you charge to it and pay it off every month, you will still show up as having a loan outstanding on your credit report. The credit card companies report your new balance every month.
That’s something people don’t realize; if you timely pay the statement balance you don’t pay interest but that doesn’t mean your average balance is $0.
Credit card companies despise with an outsized passion those who pay off their balances.
And for that egregious financial sin, you will indeed be punished.
I disagree, we pay our balance off all the time. The trick is simple. NEVER spend more than 40% of your max limit, keep emergency cash for those CC’s just in case things go south to avoid any type of debt collections
I think the problem is canceling the card—I pay off every month but do NOT cancel card.
Yep That’s a roger!
I have one credit card and have paid it off every month for the last 10 years.
Yep! Me,too.
We never “pay our balance off”. We pay the statement balance which is up to 25 days in arrears of current balance. As far as “credit card companies”, there’s several involved in the transaction and the merchant pays a share (keep in mind debit cards too). Card issuer also has arrangements, like annual fees, mileage programs, and the like. There’s also expenses like charge-backs that you have to factor in.
So true!
I worked hard to pay EVERYTHING off.
I have no debt. Only account listed on any credit report was the last one I paid off in 2017.
My credit score—0. Yup. Zero.
You would think that NOT being in debt would be a good thing.
Nope. For those who want you to be in debt–make money from you being in debt……they hate you.
Who would have ever thought that it would be a bad thing to not be in debt…..go figure.
I refused to play their games.
It’s my way of giving the middle finger to the banks .
There’s nothing inherently wrong with holding debt. The capitalist system would collapse without it. The issue is debt relative to other obligations and income.
btw…as a taxpayer….you are not debt free!
I would say since almost the dawn of time, business has had to operate with credit reflected in accounts receivable and payable. The main business of banks historically was to discount commercial bills , along with factoring receivables.
Some folks don’t know that even enquiring on one’s credit score may cause a drop.
Other than a small mortgage on a rental property, we have no debt.
I am a frugal Scot😉
Yet we asked our younger son ( a G.M. at a major import auto dealer) to do a credit check he said, you don’t need one, and if I do one it would cost him money, and will negatively effect our Credit Score.
I had no idea.
Cheers!
You are a true Scot, sir. I salute you!
🏴❤️
🤗!!
Same here my friend, debt free. That’s why I can ask $2 million for my home. Not planning on leaving anytime soon but…. You want it pay me $2M
There are so many tricks to get out of debt and reduce interest to the lenders. Done for years.
Nice!
We too have done quite well
avoiding consumer debt, and leveraging cheap money on “good dirt”
A tenant we have ( a terrific individual) bought an electric car a few years ago and not long after that her business struggled.
She returned the car and was shocked that after many, many months of payments, she still yet to pay off any principle.
Financial illiteracy is rampant.
Cheers!
“Financial illiteracy is rampant. ”
That is not an accident either.
Agree.
Bumbled across CTH ~Feb. 2018 and have since been checking in almost daily. Awesome, informative, recommended-to-many-by-me, site. (Thank you, Sundance and everyone helping keep it going!)
WRT credit scores, years ago “Frontline” (cough cough) did a show on the credit card company business….and made the claim that, within the industry, folks who never carry a balance are labeled “deadbeats” within credit card companies. (CHeck your interest rate; balance-carryers are the REAL gold for CC companies.)
“What Dekester said,” when it comes to *you* paying for *your* score from “the FICOs of the world). Circa the early ’90s I broke down and obtained a Discover card because it was becoming difficult to find gas stations accepting personal checks (obtaining actual cash requiring special/inconvenient bank trips in those days). Have had it ever since; have *never* not paid it off monthly; began getting freebie (from the card issuer) FICO scores perhaps 5+ years ago; two mortgages (the only loans ever taken out) paid off early by 1988. July, 2022, my FICO score dropped from the steady ~830 (“Exceptional”) it had always been since becoming visible to me; to ~640 (“Fair”)…while – from my perspective – *nothing* had changed on my end regarding card use/amounts-charged, life status (well, other than aging every year).
Curiosity finally got the best of me, and this “deadbeat” is presently trying to learn from FICO, “WTF?” (Klaus? Klaus???)
Some people like to tell others how much they spend.
I prefer to tell others about how much I saved.
I spent a lot of time with Scots. Excellent mentors on how to be frugal.
After my bank debit card was hit by hackers last year I checked my credit score and signed up on a Credit lock through Experian.
Along with the service I get a free monthly copy of my credit reports through all three credit bureaus. It also has dark web monitoring,etc.
I figure that there will be more identity theft and bank fraud the worse the economy gets and I should be proactive. I suffered no loss from the hack. Bank reversed all charges.
Hate having to spend the money for the service–but I look at it as a type of insurance.
I don’t inquire of the credit tracking companies. I get a monthly report via my bank that does not impact my credit score ever.
Nice!
Go to the “big 3” and put a freeze on your credit reports. Even with that you can get 1 report per year free for yourself . They try to sell you your “score”, monitoring, etc which you can ignore.
I have had a vendetta against banksters for decades after they refused me credit when I needed it. Near 850 score.
I have multiple cards with zero balances that I use periodically just to keep them active but immediately pay so they DO NOT GET A DIME!
The issue is that you closed your card. That shrinks what the banksters regard as your available credit and drops your score.
Pay them off but leave card available. We don’t have a mortgage anymore or car loans.
They GET NOTHING
There are many variables for each individual. I had a very, very high credit limit on that one card. If I were ever to use even 1/4 of it, I wouldn’t be able to make the payment. Trying to trim the sales, considering my age and limited income so in my situation, it made sense to close it.
There’s something ultimately prideful for me to keep a high-limit, unused card open just to keep a high credit score. Cost/benefit analysis in terms of everyday life comes into play there. A certainly practical humility in these things is useful for being at peace in the current mess. I won’t be using any credit because I cannot afford the debt–and let’s keep that straight: they are debt cards.
So we are pushing a GIANT Boulder uphill trying to not lose our footing and certainly not getting ahead into a Positive
position.
Just like the depression era….. Make Do, Do Without, Use It Up, Wear It Out
I am exhausted !
Pompous pontificating pustulant phony peons.
A piece of work indeed. When you can print monopoly money and hand it out, it’s really a small miracle that all entities aren’t corrupt.
These people are evil.
Powell looks like he could be Merry Garland’s brother. Twin losers.
For some reason, I got on to the mailing list of a ‘top line’ investment broker. He seems to be completely unaware of any hardship of the middle class, and talks about how inflation is lowering, jobs are up, the US is coming out of its economic downturn, etc. Perhaps these are the conditions that are being felt by people in upper middle class and beyond. But as I read this newsletter, I cannot believe how out of touch these people are with reality.
They live in a bubble and make their living convincing others to invest regardless of downside risk.
I always view any financial reporting as someone trying to influence a certain direction in whatever they are reporting on.
It’s always interesting to read headlines of what they are pushing, and seeing the markets reacting directly opposite to what the headline is pushing.
Just got back from COSTCO … another healthy set of price increases from the last time I shopped. Chicken prices WAY up. But most everything else bumped up … again. And several items that we regularly buy, eg; frozen chicken Taquitos (wife’s favorite snack) were missing … gone. I guess chicken is hit HARD by the avian flu, or whatever.
The supply chain of the worlds food is quite fascinating.
We are super shrewd grocery shoppers, and really pay attention.
What intrigues us is that here in in February in British Columbia we can by Cherries from Chile for$2.99 (Can) a pound and decent Red seedless grapes from Peru for $3.99 ( Can) per pound, even Oranges from California for $1.89( Can)
Of course they will be preserved in some way, maybe like the Bananas are.
But still, that’s a heckuva distance to transport produce, and get onto the shelves.
Cheers!
I participate in a weekly blog where people post their frugal accomplishments and monetary challenges. People who had not been to the grocery store in 2 weeks we’re stunned this past week by price increases. One couple were at a regular chain gricery store and on their way out walked down the chips and snack aisle. They were astounded that potato chips are $6.99-$7.99 per bag now.
Another trip hazard to keep track of.
Don’t break al leg.
Shutting down the supply chain and deliberately spiking energy prices are why we had the levels of inflation we experienced. Too many conservatives, especially the clowns at the Wall Street Journal editorial board, mistakenly blame the Fed and cheer it on to keep hiking rates. Sundance is spot on when it comes to this issue. Keep this in mind about the Fed: its number one priority is to stop wages from rising. That’s not what Congress mandates, and the Fed won’t admit it, but that is its main priority. The uniparty has had wide open borders for the past 2+ years to put pressure on wages, and the Fed is doing its part too. To obscure what it is really doing, the Fed relies on various arcane models and pretends to take an entirely academic approach to its mission, but it really doesn’t. Those models heavily weight wage increases. The Fed then cherry picks data to support its approach.
If you want to know why the uniparty does anything, look to the effect on wages, and there’s a good chance that whatever it is doing is putting downward pressure on wages. Slavery, the women’s movement, the 1965 immigration act, amnesty in the 80s, and de facto open borders since the 80s are all predicated on keeping wages down.
Good observation…
Cartelizing the “managers” and commoditizing the workers they live off.
Not a terrible fundamental description of Communism.
That certainly explains Dem Party support for Unions since the early tenement days in NY!
The FED is helping manage finished goods cost by destroying demand. But as noted it is not a demand problem. What will be a problem is the lack of demand, the middle and lower income will be hurt through loss of jobs/ hours. So the elite will control their inflation problem by making sure no one except themselves can afford to buy anything at any price. That’s how they will solve their make believe ‘climate’ problem, no one will be able to fly or drive except for them.
The real problem is Govt’ overtaxing the average worker. Inflation generally occurs when Govt’ takes too much, therefore the rates of labor, or price of goods goes up. In a good economy prices actually come down, as we witnessed in Trumps economy… most notably in grocery prices which were declining after he got into office and established his economic powerhouse….. (before the covid scam was created, that is.) Anytime these crooked Democrats get into control (via hook and crook) and they start talking about raising taxes you know everything is about to tailspin, because immediately upon hearing that BS, any decent business person will start to raise prices to cover the added (no value added Bureaucrat ) cost. What’s weird under Biden is, it had so many layers of added BS costs thank to his ineptness, or stupidity.
He’s a klaus Schwab climate change zelot
President Trump should have shit canned this guy a long time ago.
May he and the rest of the liars feel perpetual …exhausting physical pains.
Find and replace fixing the ballot box with fixing the inflation rate. Don’t drink the kool aid.
Jerome lies to the panting zombies with such ease. The zombies will give him a 10MIL advance for his book of lies once he leaves office and 100K per speaking fee.
In other news, the IRS will have a new app that will track down tips for waiters. You would think they could use technology to track down repatriation money from all these illegals or even account for the Billions sent to the UKR war and Biden laudromat.
Is he lying or just stupid?
Both?
You are missing the point, Sundance. Powell is fighting Davos. Do you think that there isn’t a price to be paid for 12 years of QE? Shortsighted isn’t a good look.
Not even wrong.
“Disinflation” Translation: “Were putting all our shit on sale cause customers aint buying “
I went to my local grocery/department store today. No one is buying any “goods” except food, and not a lot. This is a huge store and hardly any shoppers. Very little in everyone cart and a lot of “putting back on the shelves”. This has been going on for months and months – western suburbs of Chicago.
We are in a depression , where even a job isn’t gonna save most people from the Govt induced widespread financial problems. (Think Obama/Biden Union bailouts…. leading to $100,000 pickup trucks…. that is just one example.) The govt’ has taxed everything into the stratosphere…. now they are overtaxing properties that are paid off…. and now we have people making almost $30 an hour starting out for unskilled work….. whereas a Skilled person starting out would normally make $20/ hour. There is no easy fix, too many people on the Debt/Credit merry go round.
I still think they are deliberately destroying our economy and the US dollar…. All part of the diabolical plan for a global currency and a one world government… These people are not stupid, they are just destroyers of the good.
God created nations for a reason…. one of the main reasons for so doing was to keep the power of fallen mankind divided so that one nation, or a group of nations can restrain the wickedness and evil of another nation that goes off the rails…. which we have seen happen throughout human history.
We know from Scripture that the end-time kingdom of antichrist will do what it can to erase all of the nations and make itself the only political, financial and religious power on earth…. We also know King Jesus Christ will destroy that end-time one world globalist system and all who joined with it and supported it when He returns…. and that He will also re-establish the nations as nations…. though all will at that time answer to Him, the King of Kings and Lord of Lords….
4 days ago Biden proudly says : “[I have] created more jobs in two years than any presidential term at any time”.
Today, Fed Chair Powell says: “the labor market [has created too many jobs so, I’ll have to keep raising interest rates]…”
Which one is confused? And do you believe these two clowns are running the show?
https://www.wsj.com/articles/feds-jerome-powell-to-address-economic-outlook-with-hiring-surge-in-spotlight-11675781503?mod=economy_lead_story
https://news.yahoo.com/us-adds-517-000-jobs-144644156.html
“This guy is really a piece of work. ”
Well he is a lawyer. What may be worse than a banker? An attorney doing the work of a banker.
Liars lie.
The retail prices for energy products continues to remain high, but if you look at the futures markets, price of crude oil is very close to 2018 pricing, as are heating oil, natural gas, and gasoline. They are not as low as they were during President Trumps administration, but when the economies of the world slow down, the relative pricing of energy declines.
So now, the Right F’ing Question might be: What is keeping retail pricing elevated? Hmmmmm?
https://oilprice.com/oil-price-charts/
Unbelievable move…again.
Quantitative easing and quantitative tightening are just fancy words for quantitative laundering.
And the major question that comes to my mind, every time I read or watch something this IDIOT has said is WHO on Gods Green Earth recommended and saw to it that Trump nominated this MORON? From the day he took over, he has been an IDIOT…..
Dave Brat explains all the lies.
Dave Brat Walks through Latest Economic Data From Biden Regime: “The Real Economy Is In A Nose Dive”
By Bannons War Room
7 Feb 2023
https://rumble.com/v28nw14-dave-brat-walksthrough-latest-economic-data-from-biden-regime-the-real-econ.html
For some reason, people inside the DC beltway become afflicted with a peculiar disease. I refer to it as “poweritis”. The initial symptom is that these people start by having a rather high opinion of themselves. Eventually full blown poweritis leads to fantasy where facts and logic are meaningless. Biden has clearly had poweritis for half a century while Powell only a couple of decades. Poweritis is damngerous to the individual and society at large. It is only curable by a year in the middle of America and most quickly by working on a farm slopping the hog pens.
Widespread pay raises at pace with inflation causes more inflation because labor costs increased at every level of production. That’s the fear and why Powell seems giddy, so far,he seems to be avoiding causing stagflation.
I guarantee Powell will overshoot his target. The effects of fed policy lags, as every economist knows. This self-destructive energy policy is where the focus should be now, but it’s their religious duty to pretend global warming is human-driven.
Yes energy hikes, but also devaluing currency by printing too much fiat. Greeks, Romans, more recently Weimar Republic, Venezuela, Zimbabwe, & Lebanon.
To Mari in SC and Scott S: I received info from Ameriprise today that underlines what you wrote:
“Growth in the dollar value of credit card debt has grown at an accelerated pace over the last year partly due to higher gasoline prices. People almost universally use credit cards to “pay at the pump” for gasoline. As such, when gas prices jump, as they did last summer, the dollar value of charges goes up, all else remaining equal.
“A higher dollar value of charges (as indicated in our gasoline example), brings us to our fourth reason – the way credit card debt is measured. The Fed measures consumer credit on an average monthly basis. If you pay-off your credit card balance in full each month (as approximately 45% of people do, according to the Fed), you’d be forgiven to think you have no credit card debt. The Fed would disagree. For example: If you start each month with a credit card balance of “$0” and charge $1,000 to the card over the course of the month, your “average monthly balance” (i.e., what gets calculated into the credit figures) is $500.”
Powell is a 🌭 🧠 piece of 💩!
Let me see if I understand Stoolman Powell: A large increase in the number of PAR-TIME jobs justifies a large increase in the prime rate. Yep, got it.