It’s been said that you can’t please everyone all the time. But can you fool enough people some of the time? That’s Jay Powell’s game in a nutshell. He’s got the world believing the Federal Reserve is out here printing gobs of money and sending a tidal wave careening throw the whole economy (stock market first). Nope. Monetary policy is little more than getting people to believe this is what’s happening.
For a little while this year, he was on his game. Remember May 17? That particular Sunday night Chairman Powell joined Scott Pelley who Jay knew would go along with the ruse; no one ever challenges these people. Instead, Pelley let the central banker uncork one lie after another.
Figuring out why he’d do something so dastardly is easy; times were bad, really bad. In a deflationary situation such as that, the Economics textbooks says, in no uncertain terms, central banks commit all hands on deck to sell its counter before the deflation sets in too far. Inflation expectations are the model antidote. Read more…..
Chart of the Day
Tim Quinlan, Wells Fargo Senior Economist weighs in on the economic outlook for 2021.