Do you have any thoughts on the “reasons” they are doing this? Is it political or just the usual bad Fed policy? Is it a conspiracy to ruin the economy or do they really think their plan is working? And doesn’t history show that this plan is too risky ? And considering the shaky state of geopolitics, it’s even more risky? Or are we just being worry warts ?
There is no way to disprove a conspiracy. At the moment, I am unpersuaded that the evidence supports the assertion of an organized conspiracy, but absence of proof is never proof of absence.
While I usually reference the perversion of science with ideology in the context of the COVID "pandemic", the principle applies equally to economics.
For the last 40+ years, it has been the accepted wisdom that the proper response to inflation is to raise interest rates. Ever since the Volcker shock therapy of the early 80s, this is the orthodox view, and any dispute this doctrine is simply disregarded.
Thus when Canada tried it without success, when Japan tried it and catalyzed their serial lost decades of deflation, these failures were not enough to challenge the orthodoxy. Even the Central Bank of Russia raised interest rates right after Putin's invasion of Ukraine, just to keep a lid on inflation.
When Ben Bernanke continued Greenspan's rate hikes in 2006, thereby catalyzing the subprime mortgage crisis which metastasized into the Great Financial Crisis, they ultimately gave him the Nobel Prize!
Powell is following the orthodox view of how to resolve inflation, and interpreting every data point from within the context that interest rate hikes will always bring down inflation. Consequently, if he believes prices are "too high" (Bernanke's operative logic in 2006), he will push for more rate hikes.
To look at the data honestly with an open mind, you have to consider the possibility that rate hikes don't necessarily work. Powell has shown no evidence of that level of awareness.
Interesting. So they are simply following an established doctrine whether it’s based upon reality or not . Seems to be happening a lot in our world lately.
Maybe the feds are skeptical of their inflation reports like the rest of us?
If they were they would also have to be skeptical about the rate hike strategy itself. I don't see where is any reflection on that.
Do you have any thoughts on the “reasons” they are doing this? Is it political or just the usual bad Fed policy? Is it a conspiracy to ruin the economy or do they really think their plan is working? And doesn’t history show that this plan is too risky ? And considering the shaky state of geopolitics, it’s even more risky? Or are we just being worry warts ?
There is no way to disprove a conspiracy. At the moment, I am unpersuaded that the evidence supports the assertion of an organized conspiracy, but absence of proof is never proof of absence.
While I usually reference the perversion of science with ideology in the context of the COVID "pandemic", the principle applies equally to economics.
https://newsletter.allfactsmatter.us/p/before-faucism-science-endured-lysenkoism
For the last 40+ years, it has been the accepted wisdom that the proper response to inflation is to raise interest rates. Ever since the Volcker shock therapy of the early 80s, this is the orthodox view, and any dispute this doctrine is simply disregarded.
Thus when Canada tried it without success, when Japan tried it and catalyzed their serial lost decades of deflation, these failures were not enough to challenge the orthodoxy. Even the Central Bank of Russia raised interest rates right after Putin's invasion of Ukraine, just to keep a lid on inflation.
When Ben Bernanke continued Greenspan's rate hikes in 2006, thereby catalyzing the subprime mortgage crisis which metastasized into the Great Financial Crisis, they ultimately gave him the Nobel Prize!
Powell is following the orthodox view of how to resolve inflation, and interpreting every data point from within the context that interest rate hikes will always bring down inflation. Consequently, if he believes prices are "too high" (Bernanke's operative logic in 2006), he will push for more rate hikes.
To look at the data honestly with an open mind, you have to consider the possibility that rate hikes don't necessarily work. Powell has shown no evidence of that level of awareness.
Interesting. So they are simply following an established doctrine whether it’s based upon reality or not . Seems to be happening a lot in our world lately.
This is why I am always harping on the data and the facts. Because this entire mythology of "expertise" has caused authority to replace logic.
There is no way that can end well.
What do you think would happen if they did not intervene? Would the market correct itself faster or slower ?