Trickle Down Theory: Powell Chastises Trump, Praises Himself

-edited

In a speech today, Fed Chair Jerome Powell took a swipe at Trump, then patted himself and the Fed on the back.

Powell Snipes at Trump

Image courtesy of Hedgeye

Inquiring minds are tuning into a Powell Speech in which he chastises Trump and praises himself for a job well done.

In a blast pointed directly at Trump, Powell proclaimed "The Fed is insulated from short-term political pressures—what is often referred to as our 'independence.''"

Self-Praise for Listening

At the heart of the review are our Fed Listens events, which include town hall–style meetings in all 12 Federal Reserve Districts. These meetings bring together people with wide-ranging perspectives, interests, and expertise. We also want to benefit from the insights of leading economic researchers.

We have been listening. What have we heard? Scholars at the Chicago event offered a range of views on how well our monetary policy tools have effectively promoted our dual mandate. We learned more about cutting-edge ways to measure job market conditions. We heard the latest perspectives on what financial and trade links with the rest of the world mean for the conduct of monetary policy. We heard scholarly views on the interplay between monetary policy and financial stability. And we heard a review of the clarity and the efficacy of our communications.

In Praise of Fundamentals

Solid fundamentals are supporting continued growth and strong job creation, keeping the unemployment rate near historic lows. Although inflation has been running somewhat below our symmetric 2 percent objective, we have expected it to pick up, supported by solid growth and a strong job market. Along with this favorable picture, we have been mindful of some ongoing crosscurrents, including trade developments and concerns about global growth. When the FOMC met at the start of May, tentative evidence suggested these crosscurrents were moderating, and we saw no strong case for adjusting our policy rate.

Trickle Down Theory Returns

Like many others at the conference, I was particularly struck by two panels that included people who work every day in low- and middle-income communities. What we heard, loud and clear, was that today's tight labor markets mean that the benefits of this long recovery are now reaching these communities to a degree that has not been felt for many years.

Hallelujah!

What a sappy, self-congratulatory speech.

Hallelujah! Trickle down has arrived just in the nick-of-time for the next recession.

Trump's response will likely provide more amusement.

Hello Jerome Powell - We Still Have Questions

Dear Jerome Powell, instead of patting yourself on the back and answering fluff prepared questions, how about addressing mine?

  • Let's discuss the Fed's economic models and their miserable performance.
  • Let's discuss bubbles.
  • Let's also debate the Fed's inflation expectation theory. I can logically prove that it is nonsense.

Answers Please

Hello Jerome Powell, We Have Questions

Please have a go at it, Mr. Powell.

Mike "Mish" Shedlock

Comments (17)
No. 1-10
JJ Johnson
JJ Johnson

Tight labor markets in lower and middle class communities?

Sure, if you're trying to compete for your 3rd 10hr/week job...hoping your managers can juggle that schedule!

All praise the 10 year time-line that a microeconomic short term cure, bastardized into a macroeconomic policy FINALLY helps the people it was intended to....or so says Powell.

Mish
Mish

Editor

FINALLY - Yes, just in the nick of time, too

thimk
thimk

well i could do without the self-aggrandizing, but he didn't sound to dovish to me.

JonSellers
JonSellers

Labor participation rates remain low based on historical standards. Which is one reason that there continues to be almost no upward pressure on wage rates.

Americans want jobs that pay enough to support a family. They want jobs that pay enough that they can save for a rainy day. They want a level of security in their job so that they make solid plans for their family's future. They want a chance to retire comfortably some day. They want to know that a significant illness isn't going to ruin their life plan.

This economy isn't providing this for a large enough percentage of the population. Hence Trump. The federal reserve doesn't have the ability to make this happen. American capitalism is failing, and the federal reserve can't save it. If Republicans and conservative democrats (Biden) can't fix this, we're going to get Bernie/AOC. And it will be our fault.

LawrenceBird
LawrenceBird

If the big 'uncertainty' for economic growth is the trade war, how will lower rates cure what ails? Likewise, if the orange one wakes up in a good mood and actually signs off on a deal with China, does that mean we are back to rate hikes (hopefully)?