Is Powell Actually Volker? 2% Inflation at all Costs

This week we got remarks and a decision by the Federal Reserve. They are still raising rates, by 0.25%. That adds to the losses on the banks bond portfolios, but not right at first (because bond prices actually rose on that news).

Powell preached about economic and financial uncertainty, which begs the question why did they unanimously raise the Federal Funds rate?

The Federal Reserve is dead set on not making another mistake - not raising fast enough; and then raising to fast - and further damaging it’s reputation.

Under no circumstances will Powell ease financial conditions before inflation is 2%, significantly increasing the risk of a recession.

The pace of US bank failures is completely insane, 5 banks failed over 10 days. The fastest bank run in US history, all because you can open another account and wire your cash from your mobile phone in a single day.

Janet Yellen stated on Wednesday that she doesn’t see the need to raise the FDIC insured limit, right as Powell was stating that the banks are liquid and solvent. In each case they are trying to word their way into calming markets, same thing that Greg Becker, Ex-CEO of SVB, tried to do.

At the end of the day regional and community banks drive small town USA, and the real estate sector.

The Fed has a rich history of 180 degree pivots away from their forecasts and I feel like that may be coming soon, leading to the end of a cycle.

Anyways that’s my rant on the Fed, here’s everything I read and wrote this week.

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