Jerome Powell, the Fed, and Joe Biden are in a pickle. They can either try to fight record high inflation by raising interest rates, which will destroy the economy for good, or leave rates alone resulting in even higher inflation. It looks like either way, Powell and Biden (Obama) have no answers.
Yesterday, we saw again how political the Fed is and how much they side with the corrupt Democrats.
Zerohedge reports this morning on Jerome Powell’s remarks versus reality:
During his post-meeting press conference, Powell insisted the economy was not in a recession.
“There are too many areas of the economy that are performing too well. I would point to the very strong labor market. [It is] true that growth is slowing.”
As Peter Schiff noted, the Fed chair apparently picked up its copy of White House talking points declaring that two consecutive quarters of negative GDP growth doesn’t mean the economy is in a recession.
“If you think the Fed is independent, today’s press conference should put that myth to rest. Powell clearly got the Biden administration memo that recession is not defined by two consecutive quarters of falling GDP. Powell even said it’s not his job to declare a recession,” Schiff said.
Powell has to downplay the GDP. In the first quarter of 2022, GDP came in at -1.6 percent. The Atlanta Fed projects another -1.2% decline in Q2. Using the common definition, that would mean we’re in a recession now, and we have been all year.
While Powell and others keep saying the economy is strong, the only data they consistently point to is the labor market. But the job market is a lagging indicator and even it looks shaky. As Schiff pointed out during an interview with Laura Ingraham, we’ve seen three straight weeks of increasing first-time jobless claims, and they’re at the highest level since October last year.
Meanwhile, if you look at that last job report, even though we added about 400,000 jobs in the establishment survey, the household survey lost about that many jobs. But if you actually look at the jobs, almost all of these new jobs were for people who already had jobs. These were people taking second and third jobs because they’re struggling to pay the bills. And you have a lot of retirees who are being forced back into the workforce because inflation has eviscerated their incomes, and now they have no choice but to go to work. So, these are not jobs that people want. These are jobs that people are forced to take because the economy is so weak.”
During the Trump years, the Fed was clearly acting as a political bully. They nearly shut down the US economy by themselves in 2018. They started raising rates as soon as President Trump won the 2016 Election after years of keeping rates at zero for Obama.
Now with Biden’s actions killing the economy, the Fed is trying to keep the economy afloat. But this may not be possible. The US debt is at all-time highs and interest payments on the debt are growing as Biden continues to spend relentlessly. The prognosis is not good.
Zerohedge writes:
If the Fed was really serious about fighting inflation, it would be rapidly shrinking the money supply.
So, the question remains: is the Fed at the end of its rope? And when it inevitably reaches that point will it let go, keep tightening to fight inflation, and take the economy into freefall? Or will it surrender to inflation and pivot back to easy money and quantitative easing, letting inflation run wild in order to rescue the economy?
