Game Changer

Fed Chair Powell, having got his re-appointment out of the way, finally decided to admit that inflation was not transitory and “tapering” needed to be accelerated to deal with it.

Well good luck with that, Mr Powell, but markets reacted to the announcement with a negative tone which is now supported by a hawkish Fed. Of course the real problem is not the Fed, it is the White House crew’s spending that causes inflation. The Fed helps by keeping rates low and of course the rate on cash money is zero, so reducing the cash flood is actually a minuscule rate increase. But as I have mentioned before, normal rates would be in the 8-9% range and we’re a long way from that. But we’re headed there, and above there, if inflation is to be Volckerized.

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