“After thinking about it all day, I’m still not quite sure this isn’t a joke; a high-brow commitment of utterly brilliant performance art, the kind of Four-D masterpiece of hilarious deception that Andy Kaufman would’ve gone nuts over. I mean, it has to be, right?” – Jeffrey Snider, Alhambra Partners
No Jeffrey, Powell’s speech was not a cruel joke. But it certainly was loaded with “Fed speak.” The bottom line is that “letting inflation run above the 2% target rate” is code for: “we have to print a helluva lot more money to keep the stock market and the big banks from collapsing.”
In our latest weekly update, Chris Marcus (Arcadia Economics) and I discuss the farce delivered by Jay Powell yesterday morning:
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So, I’m not sure I understand where all this will be ending. Since we are leveraged to the hilt, basically in debt all around, from mortgages, to credit card to student debt, ad infinitum, even with all the current Fed stimulus, wouldn’t we be in danger of a major downturn when all the defaults start hitting? Wouldn’t that cause asset deflation, and also dollar deflation? At least for a while? I keep hearing about hyper inflation, but when it hits the fan won’t the dollar deflate also along with asset prices? Just trying to sort this all out, and confused.