It is Time to get Serious

I am back from vacation. It was a good period of reading and relaxing and long walks. Fed Chairman Powell is speaking tomorrow at the virtual Jackson Hole meeting. I wonder if they will have virtual steaks and mountains.

In any case it probably will not make much difference in what he says as his ongoing deeds have set the course of events. In short he did a great job of providing shock treatment to the COVID racked economy in March and April of 2020 but the ongoing 120 billion dollars a month input into the economy since should have been ended a year ago on August 10, 2020. The fact that it has continued has created a burdensome level of excess.

Now we will see where the effects will manifest themselves. Most likely in a state of stagflation. Embedded high inventory costs are running into a economy where consumer confidence is under pressure. Coupled with the fiscal dollars that have rolled into the consumer and which are being used to fill debt holes, rather than production, Powell has a problem, interest rates are going higher.

Let’s see what flows through tomorrow. We will comment.

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