With all due respect to the chairman of the federal reserves of Jay Powell, I was among his most severe critics in the past four years – since the Fed has completely wrong the story of inflation, when they poured into a cash offer and bought the Joe Biden increase in the amount of $ 5 trillion in the amount federal consumption and deficit and debt.
The Fed first denied that there was a problem with inflation. Then they claimed it was transient. And when they were bypassed to put their feet on the brake, the cat was from a bag of 9% inflation.
During Biden terms, prices increased by more than 20%, while wages increased less. Hence, the rebellion of people of the working class of all colors and stripes. The rebellion that was chosen President Donald Trump.
All that was said, Jay Powell at today’s press conference He spoke very reasonably and seems to have a story about tariffs and inflation.
As I mentioned, it can be the case that it is appropriate to see inflation sometimes if it will quickly disappear without action if it is transient. And this may be the case in the case of tariff inflation.
The most prized topic on Wall Street today is that Trump’s tariffs will be an inflationary. Won’t.
Powell is right: any Price increasing will be transient.
Think about this way. If the price of a washing machine grows due to tariffs and the family goes out and buys a machine at a higher price anyway, it means that they have less money for consumption on other items.
The price of a washing machine will rise, but some other prices or prices will decrease. This may mean that the family will not buy a television set, computer or something else.
So, one price rises, families have less consumption to another good, and that other price drops. But the total consumer price index of 80,000 items does not change.
This is what makes it transient.
National Economic Council Director Kevin Hassett unpacked President Donald Trump towards “Pro-Rest” Economic Policy on “Kudlow”.
The only way that an individual price can lead to greater total inflation is if the FED includes a printing press or if the federal government starts consumption. If this was the case, then the overall inflation will increase, whether there are tariffs or not, because inflation is basically a monetary problem.
And, by the way, if the FED was wrong to include a printing press, the dollar would collapse. And that would also raise the entire inflation index.
Now, although the Fed does not target dollar or foreign exchange courses, it is worth noting that the price of gold is $ 3,050 today. That is the FED warning – to make their monetary powder dry.
And it seems that Jay Powell will really maintain a monetary powder dry. As he said today, “We should not rush to adjust our attitude of politics.”
This is intended: the central bank does not reduce interest rates or increases the cash offer.
The Fed also announced that it will continue to reduce the holding of state securities and mortgage bonds, although the pace of the fall will soon slow down. But this is a good thing, because it will control the cash offer, which means that the inflation rate should remain under control.
All of this suggests that the hysteria of Wall Street and liberal media is a lot of HOO-ha of the influencer tariffs.
So, I’ll applaud Jay Powell – because he corrected it. Once in a row.
