Powell's Choice

 

Powell has a difficult choice ahead.  He can accept the obvious runaway inflation and dismiss it as “transitory” or he can grow a pair of balls and call bullshit on “the everything bubble”.  It is as plain as the nose on your face – the everything bubble exists but many people do not want to acknowledge it because they enjoy believing in the fairy tale that their houses magically increase in value by 25% in a year and that they are stock picking Mensa members and that Tesla is somehow truly more valuable than the rest of the automobile industry combined.  It’s bullshit.  I know it.  The Fed knows it.  It’s a cheap credit mania chasing all assets.  By returning the cost of overnight credit to something more normal than 0% means destroying the myth and disappointing a lot of baby boomers who hoped to retire soon on their newly minted Covid-19 riches but the value of the currency is quickly going into the toilet.  The Fed knows it and the only way to correct it is by pulling a Paul Volcker move and returning some sanity and discipline to the credit markets.  If you’ve been spanked recently by the stock market, you ain’t seen nothing yet if the Fed takes its responsibilities seriously on March 15 – 16.  The Fed can pussy out and be the “this is fine dog” or it can be Moses returning from the mountain with the 10 Commandments in hand and sparking fear and shame into the hearts of the sinful Israelites who have been partying like it was 1999 in his absence.  Take your pick Mr. Powell.  Either way, old Uncle Kenny has covered his ass and will make out just fine no matter which way the wind blows.