Fed Lie Of The Day: "Low Inflation Is One Of The Major Challenges Of Our Time"

Fed Chair Jerome Powell is preaching economic nonsense regarding inflation. His worry is the US becomes Japan.

Bloomberg reports Powell Aims to Dodge Japan Deflation Trap With Dovish Fed Tilt.

Declaring that too-low inflation was “one of the major challenges of our time,’’ Powell left open the possibility on Wednesday that the Fed’s next interest-rate move might be a cut after four increases last year.

The world’s most powerful monetary policy maker also sketched out a harmful scenario in which consumers and companies lose faith in the Fed’s ability to hit its 2 percent inflation target.

“If inflation expectations are below 2 percent, they’re always going to be pulling inflation down and we’re going to be paddling upstream’’ to keep prices up, he told reporters after the Fed unexpectedly scrapped its forecast of any rate hikes this year.

“I don’t feel we have kind of convincingly achieved our 2 percent mandate in a symmetric way,’’ Powell said after the Fed left its benchmark policy rate in a range of 2.25 percent to 2.5 percent.

Powell confessed that there is “no easy answer’’ to explain why price rises have been so subdued. Two possible reasons he cited were that the labor market might not be as tight as policy makers believe or inflation expectations might have slipped lower.

 

Absurd Discussion

The entire discussion is so absurd it's hard to know where to start, but let's start with a simple translation.

Powell: Inflation is one of the major challenges of our time.

Translation: One of the major problems of our time is your dollar is worth too much. The dollar buys too many good and services.

The Fed would be very pleased if your dollar was worth less and less each and every year.

Make no mistake. That is precisely what Powell is saying.

Easy Answers

The Fed has no easy answers as to why it cannot destroy the purchasing power of the dollar as much as he would like.

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Gary Anderson 1 month ago Contributor's comment

But Mish, you have warned of a deflationary world. Powell is acknowledging a similar position. As Tim Duy has said, the numbers call for a rate cut. But probably a small one, not one like the big cut Trump wants. GDP is slowing. I do not think we will win the trade war either way because we don't make what we need while China does:

talkmarkets.com/.../four-signs-trump-could-ignite-a-cold-war-with-china