by Tom Luongo, Tom Luongo:
I hate to gloat but, screw it. I’m gloating. With every FOMC meeting this year, Jerome Powell has become more and more hawkish, but the denial of this still dominates the headlines. He raised the Fed Funds Rate to 4.5% last week, a level unthinkable to nearly everyone, including me, this time last year.
I told you all over a year ago Powell and the Fed were going to war with Davos and the ECB over Climate Change and their push for war with Russia. No one believed me then, and rightfully so. The idea was daft given the Fed’s history, the US’s books and the reality of a “Biden” presidency seemingly hellbent on spending the US into oblivion.
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Hell, I barely believed me.
What I did believe was the Fed would be more aggressive than the majority in even the alternative finance space did, what I like to think of as the Zerohedge Set, because I didn’t think Powell was just another garden-variety globalist like his predecessors, Janet Yellen and Ben Bernanke.
In this business, “personnel is policy” is more important than our opinions on the numbers or even the state of the game board. Powell isn’t cut from the same egghead, ivory tower cloth of academia like Yellen and Bernanke.
He’s a private equity guy with a real background in deal-making and assessing risk when his money or his client’s is on the line.
So, expecting him to run the Fed the way Yellen and Bernanke did is a simply a bad assumption.
Powell’s statement on Wednesday was no less hawkish at 4.5% than his statement at Jackson Hole in August before he raised rates by 75 basis points to 3.25% in September. And yet, in the days leading up to Wednesday’s announcement and even afterwards the talk was still all about how he can’t go much higher; this is the last hike before he stops.
In article after article that’s all we hear. Stop raising rates, it’s your fault you’re behind the curve, Powell. Stop trying to make up for it. This guy, Peter Tchir actually thinks a recession is avoidable? Maybe in nominal terms that’s possible. To the normie crowd goosing nominal GDP constantly to avoid ‘number go down’ at the expense of literally everything that makes private capital formation possible may seem like a good idea.
Then again, you may be a Boomer.
But in real terms, terms that matter like directing capital into sustainable investments rather than throwing money at any silly ‘shovel-ready’ project Obama’s minions can cook up in a strategy meeting to sell to the Muppets, the idea of avoiding a recession is ludicrous on the face of it.
If anything, in real terms for fourteen years we haven’t been in anything other than a drawn-out struggle session forcing us to admit under duress that yes, in fact, Virginia, there is a Santa Claus who lives in the Marriner-Eccles building and he can make two plus two equal five.
It’s all been a massive leveraged loan bubble built on trillions in the most egregious spending of future seed corn in the history of the planet. No wonder Climate Change and ‘sustainable growth’ are such an easy sell to the Millennials, they’ve never really known anything other than the debt casino.
To bitch now about Powell being behind the inflation curve is just churlish back seat driving.
As I pointed out time and again, Powell’s reappointment was the subject of intense political struggle on Capitol Hill. He was only reconfirmed 6 months after he should have been and was under direct fire before that.
The policy differences between “Biden” and Powell placed “Private Equity Jay” behind the curve not because he was too chickenshit to start sooner but because “Biden” needed an excuse to not re-nominate him as FOMC chair. Raising rates in anticipation of incoming inflation while wrangling over “Build Back Better” and its $6+ trillion in spending would have given us Lael Brainard, MMT and UBI to eternity.
And the US dollar bears would have rejoiced in having been right all along while Davos grinned like the proverbial Cheshire Cat eating all the canaries.
This willful blindness to the politics of monetary policy is bad enough. But the whining about taking the punch bowl away is just selfishness masquerading as analysis. Like it or not, Powell had no choice but to monetize COVID-19 spending. That’s on Congress and Trump.
I’m happy to lay blame at the Fed’s feet, but only when that blame is appropriate. Congress doesn’t get to blackmail the Fed AND blame them for the country’s ills at the same time.
And this is why I’m gloating today. Because I’m sick to death of this “Spiritual Boomerism” rampant within the financial commentary space that believes recession is the dirtiest word in the English language and avoiding them is the Fed’s real job, even if it costs us our souls.
As I wrote last year:
… because we all want to believe we’re smarter than average bear and don’t want to face tomorrow without our favorite things we go along with the comfortable lie [we have mastered time risk].
In other words, we believe risk is someone else’s problem. And that we owe the debts to ourselves. And it’s okay to foist risk off on those hapless suckers lest we be inconvenienced by the barest minimum of privation.
Let’s call that, in the words of a friend of mine, Spiritual Boomerism.
That Spiritual Boomerism is fed every day by Davos and their flunkies in FinTwit, like Jim Cramer, Paul Krugman and every other dickhead out there talking their book. Davos needs to stop Powell and the NY Banks from upsetting their plans to turn the future into a Phildickian nightmare of total surveillance, 100% tax compliance and the ultimate veto over your economic and, if they get their way, reproductive choices.
If you think things suck now, just wait for the Great Ennui that comes with the Great Reset.
It’s a pernicious narrative woven into the fabric of our daily lives. Davos helped erect this central bank dominated world which undermined our cultural and spiritual strength, addicting us to this idea of consumption without purpose and risk without consequence.
