Kevin's Mettle Has Not Yet Been Tested

 No change in the overnight rate as of yet but some talk of what a disaster the Bernanke/Yellen/Powell Federal Reserve has been for regular working people when measuring "price stability" for goods and services.

We will not know if Mr. Warsh is just blowing smoke or if he will stick to his conviction that the current situation is not sustainable (it is not) for the largest portion of the country's population.  When I see the overnight rate increased without any "forward guidance" in spite of higher loan delinquency rates, higher unemployment, demand destruction for goods and services that is driven by abundant and artifically cheap credit, higher bankruptcy filings, a (long overdue) stock market correction, etc., then and only then will I know this dude is a serious inflation fighter.  If he caves at the first sign of trouble (a bank failure, a stock market slide lasting more than a few days, a spike in new unemployment claims), we will know that the statement made this month was just more smoke and mirrors.

Hear Me Now and Believe Me Later

Too early in my predictions but not wrong?  I incorrectly assumed that the Federal Reserve would "do the right thing".  Not in my wildest dreams would I have thought that the "Greenspan Put" would morph into "Bernanke Fun Bucks", "Yellen Coddling of the Obama Administration", "Covid-19 Stimmy Checks" and "Powell's Incompetent Policy of Transitionary Inflation".  

But, here we are.  What is not sustainable will not be sustained.   For many over-indebted Americans, the road to recovery goes through the local Bankruptcy Court, just as it has in decades past.

Kevin Warsh was confirmed - we shall see if he follows through with his past convictions on the proper activity of the Federal Reserve.

For many over-indebted Americans, the horse has left the barn.  It is not a question of lower interest rates.  The level of debt that they have voluntarily committed to is simply too great to repay.  Poor loan underwriting and short sighted policies adopted by lenders looking for customers have consequences.

Stay tuned....