Charles Gasparino, a writer for Newsweek, reporter for CNBC and longtime analyst on financial issues now appearing of Fox Business, is blasting Joe Biden, as well as his Federal Reserve chairman Jerome Powell, for their “incoherence” regarding the economy.
And interest rates.
And monetary policy.
In a column at the New York Post, he explained:
“Fed chairs have historically been inscrutable when talking in public, leaning on something called ‘Fedspeak.’ By talking in riddles, financial markets don’t overreact to your every word,” he said. “But speaking in riddles is different than acting in riddles. And that’s exactly what the Biden administration and Fed chair Jerome Powell are doing.”
That’s why, he charged, the Dow Jones Industrials has a swing of some 2,000 points – within 24 hours, this week.
“Up 932 on Wednesday, it closed 1,063 down on Thursday — because Powell conducts a monetary policy that appears to have no firm mission,” he said.
“Does Powell really want to clamp down on inflation that is raging toward double digits and eating away at the incomes of working-class Americans? A couple of weeks ago he said he did, with a vengeance. Inflation is after all the most important part of the Fed’s dual mandate (price stability traditionally comes before promoting economic growth). Stocks began to sell off; bond yields rose.”
He said then Powell indicated concern over inflation “really wasn’t top of mind,” meaning an interest rate change of 50 basis points, not 75 or another figure.
“There will also be no massive unwinding of the Fed’s balance sheet, which further reduces the money supply and squeezes excesses out of an inflated economy and speculative markets,” he explained. “That’s because Powell now claims the inflationary threat is being overblown; the economy and the markets can remain in overdrive with just a few tweaks. Markets rallied on the ‘relief’ that Powell had become a more dovish chief, who was willing to accept inflation and not do anything to disrupt asset prices.”
But then, suddenly, investors got the idea that “Powell doesn’t have a clue.”
“Was he downplaying inflation for financial reasons or as a political calculation for President Biden? Powell has a lousy track record in this regard. He got bullied by then-President Trump to back off interest rate increases when the economy was roaring a few years ago and the Fed had a shot at finally normalizing rates that have been kept absurdly low since the financial crisis,” he explained.
Those decisions left the central bank with printing money as its only available option, and then Powell “went all in on Biden’s pandemic relief spending sprees, the trillions of fiscal stimulus Sleepy Joe tried to push through when the pandemic was largely over, and the economy was humming again.”
At the time he claimed inflation was transitory – even though now it has reached a level estimated to be approaching 9% or 10%.
“Powell, in other words, is a two-time (and possibly three-time) loser on the interest rates and gauging inflation, investors signaled Thursday, which is why they took profits on their Wednesday gains,” Gasparino said.
He noted, “Maybe the Fed will have to raise rates 75 basis points because inflation isn’t abating no matter what Powell now says. After all he’s been wrong before.”