PK - assume you have considered the view of Tom Luongo and others (here is a link to another analysis of similar view -- https://greencandleinvestments.substack.com/p/its-not-about-inflation-stupid?utm_source=twitter&sd=pf ) that the fed/JP is not necessarily trying to fight/stop inflation but is instead protecting the US commercial banks and the US financial strength and independence from the effects/plans of the Davos/WEF crowd? We try to follow your updates but may have missed a direct analysis of this contra-view -- the Luongo view seems to hold water, as the idea that he's simply off-base in his approach (ie, as Tucker says, this is not a demand-side problem, it's a supply side issue) to me seems too simple and/or naive.

Thanks in advance for your insight.


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The anti-Davos/WEF narrative is an intriguing perspective but can lead to an overly narrow view of events. I very deliberately shy away from political theorizing (not just Luongo's, but mainstream narratives as well), because there is always a tendency in such theorizing to force facts into a narrative framework, whereas I strive (with varying degrees of success!) to build a narrative framework around the facts as they are.

Which is not to say that Luongo is wrong, merely that I prefer a different analytical approach.

That being said, I have noted previously that the Fed's rate hikes are propelled forward as much by a desire and even need to maintain and increase the relative strength of the dollar against other leading currencies--especially the euro, the yen, and the yuan.


The short summary take: in the race to the economic bottom the strongest currency is the one that comes in last.

While not exactly the same thesis as Luongo's (with which I am familiar), there is an overlap in the notions of preserving US financial strength/independence on the global financial stage. And even in my take, if the Fed is successful at preserving the relative strength of the dollar against other currencies, that would go a long way towards accomplishing the goals Luongo sees of frustrating the globalist machinations of Davos and the WEF.

Where I differ from Luongo is that, in my view, the Fed's rate hikes are notionally all about inflation--Powell was definitely channeling Paul Volcker in his Jackson Hole address--even though the measures are not proving at all effective at curtailing inflation. Powell is aiming at inflation, he's just missing the target by a country mile.

In my estimation, the Fed HAS to do "something" about inflation for reasons best understood by looking at currency exchange rates, and ever since the Volcker Recession the accepted wisdom is that the way to curtail inflation is through interest rate hikes. Lacking any capacity for imagination or even a firm grasp of the Fed's own data, Powell just isn't able to come up with any alternatives to Volcker-style "currency chemotherapy".

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Sep 1, 2022Liked by Peter Nayland Kust

I really appreciate the response - and full disclosure, I'm not in same universe w you on this topic (semi retired real estate background), so forgive my Q if not well formed or lacking some base understandings, but could JP really state publicly he was fighting against the Davos/WEF agenda and/or stabilizing our economy/financial health, wouldn't the press/congress/others pile on the criticism or something more serious (hamper his efforts?); is it akin to some of our political/strategic efforts (say, in the RUS/UKR battle) where we cannot state publicly what our end game is and must make public announcements that aren't the genuine reasons? so, JP must say and make all other public-view actions fit the narrative of his 'charge' of attacking inflation via interest rates, also to keep in line all those under his charge, and maybe esp those who actually like the Davos/WEF-one world WOKE gov't idea. He will never admit his true motive, if the Luongo view is accurate. Maybe I'm hoping for this view as well b/c it allows for me to believe that the US isn't destined to fold under the globalist rule.

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Given the tenor of the corporate media, if Powell were to even mention Davos or the WEF he'd probably be confined to a psychiatric institution and a straitjacket before he finished speaking.

However, it would take no extraordinary leap of logic to for him to ground justification for the rate hikes in a dollar defense--that as long as there's inflation the Fed has to raise rates to preserve the dollar's value against other currencies.

Now especially that would be difficult to contest, as the Bank of Japan has in recent months declined to make a similar defense of the yen, and that currency is now at a 24-year low against the dollar, while the ECB's laggard approach to rate hikes has been a primary reason the euro has crashed through dollar parity.

Alternatively, Powell could choose to advance the thesis that silences the monetarist mantra that inflation is purely a monetary phenomenon, and tell everyone that until the US irons out its supply chains, inflation is going to persist. That would put the inflation monkey on the Biden Regime's back, which would then have to confront inflation with fiscal restraint (bye-bye "Inflation Reduction Act") and regulatory reform, instead of just kicking back and letting the Fed do all the heavy lifting.

Being a staunch libertarian and very much an old-school ethicist, I tend to look askance at the Clintonian strategy of "public" vs "private" positions. Politicians and bureaucrats who go out of their way to deceive their own people are not doing anyone any good service.

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