Powell Enters Sicko Mode
Viewer’s discretion advised: if you want to watch all 2:28:00 of Powell’s testimony yesterday, it’s right HERE, so go right ahead. If you don’t, we have seen it, and I want to share with you what the FED is thinking right now.
First of all, let’s discuss the tone of the event and the atmosphere in the hall because Powell was not a welcomed guest this time around.
I don’t know exactly what the spin doctors and the publicity experts told these senators ahead of time about how they should treat Chairman Powell, but they clearly wanted to portray that they’re disappointed in him and the Federal Reserve Bank and that they expected more of him.
Going into this, I did not anticipate such theatrical rudeness from these politicians towards Powell, but that made things all the more interesting since there was no sugarcoating it. We were going to get some hard truths and straight-shooter replies since the politicians were not settling for evasive and broad responses – they were seeking promises, assurances, and guarantees.
I don’t think I’ve seen such a pointed and concentrated effort to corner the FED Chairman since Bernanke’s era, when he was blamed for being blind to the dangers in the subprime lending practice.
With that backdrop out of the way, let’s get into the details:
- What the Democrats accused the FED of: unethical trading by key people in the organization that serve to de-legitimize public trust in the country’s foremost banking institution, not prioritizing climate change enough, not having minority representation (Hispanics and other ethnic groups) at the top levels of the FED, putting corporate America’s interests before Main Street’s, and not doing enough to curtail inflation.
- What the Republicans accused the FED of: accommodative monetary policy for too long, acting as a nanny for America’s market system instead of letting it solve its own problems and finding its own way out of this pickle, thus ushering insane inflation levels. Additionally, succumbing to Democrats’ political pressure and entering turfs that are outside of the FED’s dual mandate, such as climate change, inclusiveness of the workforce of minorities, and appointments of women to high-ranking positions just for the sake of showing diversity. And, lastly, not adjusting policy to the tightness of the labor market.
Powell wasn’t having it. If those politicians wanted to blame the FED for inflation, heatwaves, plastic in the oceans, not wearing masks, or Seinfeld ending, Powell wasn’t about to capitulate under pressure.
Markets loved it, I loved it, and any person who has ever been the punching bag of a politician would have loved it.
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