Fed signals it could yank economic support quicker as inflation sticks around

[SouthBayDem]

Source: Axios

The Federal Reserve will consider pulling back economic support sooner "as the threat of persistently high inflation has grown," chair Jerome Powell said during a congressional hearing on Tuesday.

Why it matters: This is the biggest signal yet the Fed is backing away from its stance that soaring prices would be fleeting — a change that could shift its policies that underpin the economy.

Catch up quick: Up until now, Powell has taken a hard line that elevated inflation would be "transitory" — a word that should now be retired, Powell said on Tuesday.

"The word 'transitory' has different meanings to different people. We tend to use it to mean that it won't leave a permanent mark in the form of higher inflation," Powell said, noting "transitory" should be swapped for more specific language.

Read more: https://www.axios.com/fed-inflation-taper-transitory-powell-testimony-e2f40030-7b68-451f-8b81-510d3b841bc4.html

[WHITT]

1. But

pulling back on their bond purchases, or actually raising interest rates won't work, as the present inflation is not as a result of an overheating economy, it would only result in STAGFLATION.

[regnaD kciN]

4. ...which generally results in a change of administration at the next election...

[Fullduplexxx]

2. What economic support

[bucolic_frolic]

3. QE1-2-3 & COVID SUPPORT have distorted the economy with asset bubbles, massive

Last edited Wed Dec 1, 2021, 06:45 AM - Edit history (1)

overinvestment in leveraged goods (houses, factories, stock market margin), and poor productivity and output. So yeah, inflation ahead, and a slowing economy. Too much money, too few goods, falling productivity, money owned mostly by rich people.

We have not had a debt-liquidation recession since 1973-75 (the Great Recession being fed QE so only mortgage borrowers were the losers), and no effort to choke off inflation since Volcker. When the economy doesn't clear, the rich benefit, the poor lose.

[OldBaldy1701E]

8. Yep! (n/t)

[OnlinePoker]

5. Since the beginning of 2020, the U.S. central bank has doubled it's balance sheet

In 2 years, the FED has created from nothing $4.5 trillion. Hyper inflation is the real worry.

https://tradingeconomics.com/united-states/central-bank-balance-sheet

[WHITT]

6. The Fed

creating digital funds is not inflationary, as it doesn't add to the federal debt, and when they eventually unwind those transactions, and get paid for the sale of the securities they purchased, they will destroy those digital funds, as if the whole thing never happened.

[HUAJIAO]

7. What does this mean for T-Bill and Treasury Bond yields?

[cstanleytech]

9. What is really happening is corporations know that the Republican legislators will do nothing to

protect the average American so now they feel safe in hiking prices higher and higher to soak the American people for as much as they want.
Of course rather than admit that the right wing media and legislators blame it on "inflation" caused by the Democrats and the Biden administration.