With all the respect due to the president of the Jay Powell federal reserve, I have been among its most difficult criticisms in the past four years – while the Fed has completely deceived the history of inflation, when they flock to the money supply and essentially bought an increase of 5 billions of dollars of Joe Biden in $ 5 billion in Federal expenses and deficits and debt.
The Fed first denied that there was an inflation problem. Then they argued that it was transient. And, when they managed to set foot on the brake, the cat was out of the bag up to 9% inflation.
During the term Biden, prices increased by more than 20% while wages increased much less. Therefore, the revolt of the working class of all colors and stripes. A revolt that elected President Donald Trump.
That said, Jay Powell in today’s press conference Spoke very reasonable and seems to have history directly on prices and inflation.
As I mentioned, it is possible that it is sometimes appropriate to browse inflation if it will disappear quickly without action by us, if it is transient. And this may be the case in the case of price inflation.
The most overrated theme on Wall Street today is that Trump’s prices will be inflationary. They will not.
Powell is right: everything Price increases will be transient.
Think about it this way. If the price of a washing machine increases due to a price and a family goes out and buy the machine anyway at a higher price, this means that they have less money to spend on other items.
The price of the washing machine will increase, but some other prices or prices will drop. This could mean that the family will not buy a TV, a computer or something else.
So, a price is increasing, families have less to spend on another property, and this price drops. But the overall consumer price index of 80,000 items does not change.
This is what makes him transient.
The director of the National Economic Council, Kevin Hassett, unpacking President Donald Trump’s push towards a “pro-growth” economic policy on “Kudlow”.
The only way in which an individual price can lead to higher overall inflation is that the Fed turns on the printing, or if the federal government makes a frenzy of expenses. If this was the case, global inflation will increase, whether there are prices or not, because inflation is fundamentally a monetary problem.
And, by the way, if the Fed should wrongly turn the printing presses, the dollar would crash. And this would also increase the entire inflation index.
Now, on this point, even if the Fed does not target the dollar or exchange rates, it should be noted that the price of gold today is $ 3,050. It is a warning to the Fed – to keep their monetary powder dry.
And it seems that Jay Powell will indeed keep the monetary powder dry. As he said today, “we do not need to be in a hurry to adjust our political position”.
This is nourished for: the central bank does not reduce interest rates or does not increase the money supply.
In addition, the Fed has announced that it would continue to reduce its detention of treasury titles and obligations backed by mortgage claims, although they will soon slow down the rate of decline. But this is a good thing, because it will keep the monetary mass in check, which means that the inflation rate should remain in check.
All of this suggests that Wall Street hysteria and liberal media on inflationary prices is a lot of HOO-HA.
So, I’m going to applaud Jay Powell – because he understood correctly. Once in a row.
