Evidence Only For Hysteria

The people who believe they are the Federal Reserve’s biggest critics are actually Jay Powell’s most vocal supporters right now. Rather than being bothered by all the “Weimar” memes and printer-go-brrrrr jokes, US central bank officials welcome such free press (pun intended). Anything that contributes to the idea there will be inflation – a little or a ton – helps current monetary policy achieve its objective.

And let’s be perfectly clear as to what that objective is: not inflation itself, no, the acceleration in consumer prices is presumed to be nothing more than a byproduct. A byproduct of what? People saying there’s going to be lots of inflation.

It doesn’t matter if these claims come from the most vehement of detractors; in fact the more forceful the rhetoric the more Jay Powell believes it will move the needle toward this preferred side. The truth is he needs all the help he can get; the evidence is unequivocal about what’s really going on.

The Fed does not print money. Sorry, it doesn’t. More to the point, it wouldn’t even know-how. Thus, there’s absolutely no inflation nor any danger from it. Instead, the dangers continue to stack up relentlessly on the other side, the side of the worst form of monetary disease and it’s not the one the critics all claim. They may hate him, but right now Jay absolutely loves what they’re saying.

If only this was enough.

Over here in reality, it’s not even close. Money-less monetary policy leaves the economy exposed to, you know, monetary problems. To counteract them the Federal Reserve’s toolkit consists entirely of myths, legends, and fairy tales, but myths, legends, and fairy tales given the gloss of plausibility by the financial media as well as those who hang entirely on the “money printing” story they’d also like to sell you.

This is something Ben Bernanke would’ve told you already if the guy could be honest with himself (hero!) first before coming clean with the rest of the world. Like Chairman Jay, Chairman Ben had been accused of the same things; destroying the dollar and sacrificing the US economy at the altar of money printing excesses which would “inevitably” lead to seventies-style Great Inflation #2 – at best. The word hyperinflation was tossed around with some regularity.

The evidence conclusively disproved this nonsense. To begin with, the fact there had been a Global Financial Crisis had already exposed the weaknesses of fairy tales in the face of a true monetary disease (which currency grew most destructively inelastic, though?) And in its aftermath, same thing. Bernanke had his QE’s, his critics, and his critics hugely critical of his QE’s for all the same reasons the Fed did QE.

No inflation. Less, in fact. Conspicuously less; the second chart immediately below really exposes all these money printing fallacies:

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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