Thursday, March 23, 2023

A Dozen Questions for Jerome Powell, Fed Chair



This week, we get to listen to from Federal Reserve Chairman Jerome Powell twice – tomorrow within the Semiannual Financial Coverage Report back to Congress earlier than the Senate Banking Committee and the subsequent day within the Home Monetary Providers Committee. We will anticipate a sequence of ineffective questions, posturing for sound bites, and self-aggrandizing speeches that fake to be questions.

And as poor because the questions are, the Fed chief works very laborious to say something in any respect.

All of this can be a disgrace as a result of proper now could be a good time to get some solutions about FOMC coverage, what the Fed does (and doesn’t) imagine, and different actual points. A considering member of Congress ought to pose particular queries about broad topics, one thing alongside the road of those subjects:


12 Questions for Jerome Powell

1. No two inflationary cycles are ever precisely alike, however the 2020-2023 model appears to be particularly uncommon. How does the current inflationary cycle evaluate to earlier eras of worth instability in the USA? The place is it totally different? What are the similarities?

2. We had very low rates of interest for greater than a decade – 2010 to 2020 – and inflation remained subdued. Why did costs instantly enhance post-pandemic?

3. Is the FOMC making an attempt to create a recession?

4. If low charges didn’t trigger inflation, why must you anticipate excessive charges to deliver inflation down?

5. Egg costs have skyrocketed primarily resulting from avian flu; vitality costs are approach up, pushed largely by the Russian invasion of Ukraine. Semiconductor shortages despatched automobile costs up; meat processing labor shortages raised beef costs. How will elevating charges assist to deliver these costs down?

5. The Fed set a 2% inflation goal, and CPI rose by that in March 2021. Why did the Fed wait a full yr beforee you started elevating charges till March 2022? Why didsn’y you start elevating charges sooner and maybe extra steadily?

6. There’s a scarcity of employees throughout many industries and positions. What affect will increased charges have on firms making an attempt to fill these positions? Are you making an attempt to extend unemployment? If elevated wages is the one approach these corporations can appeal to new hires,, what different affect wil rising charges have?

7. Wages lagged inflation for many of the previous 4 many years; in actual fact, they had been Deflationary. Why are rising wages now so problematic? Why is the Fed inserting the burden of inflation on those that are lastly starting to see their requirements of residing rise?

8. House costs have skyrocketed, however we nonetheless appear to have an inadequate provide of single-family houses on the market, which some estimate at 2-3 million houses. Given this stock challenge, what is going to the impact of ongoing FOMC price will increase be on the actual property market? Would possibly increased charges slowdown the constructing of extra homes?

9. Within the Client worth index, the Bureau of Labor Statistics makes use of “House owners Equivalency Lease” to measure housing costs. Isn’t rising FOMC charges chasing extra could be some patrons into the rental market? Does that imply the FOMC inflicting CPI inflation?

10. Why does thge Fed focus a lot on surveys of inflation expectations? Do you truly imagine surveys reveal something greater than what simply occurred to the surveyed?

11. Wanting on the information on costs like delivery containers, oil, condominium leases, and so forth. it seems like inflation peaked final Summer season. How far behind actual world costs are the fashions that the Fed depends upon?

12. Why does the Fed care about inventory market costs a lot? 10% of the nation owns ~90% of shares and bonds – doesn’t that reveal the so-called wealth impact is simply correlation-based nonsense? FOLLOW UP: Why did the Fed ignore the market alerts of that the 68% rally off from the Covid lows in March 2020 by the tip of that yr?


That’s 12+, however these reveal the sorts of questions that may truly generate fascinating solutions…



What the Fed Will get Incorrect (December 16, 2022)

How the Fed Causes (Mannequin) Inflation (October 25, 2022)

Why Is the Fed All the time Late to the Social gathering? (October 7, 2022)

Transitory Is Taking Longer than Anticipated (February 10, 2022)

Wealth Impact Rumors Have Been Drastically Exaggerated (November 16, 2010)

10 Questions For . . .


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