I mean this is basically what happened. Warren held up the Fed appointments because she was holding them hostage during the infrastructure negotiations, and on some level that led the Fed to delay liftoff. - ThreadSky

conorsen.bsky.social • 96 days ago

I mean this is basically what happened. Warren held up the Fed appointments because she was holding them hostage during the infrastructure negotiations, and on some level that led the Fed to delay liftoff.

Reposted from Dario Perkins

Just listened to an interview where Scott Bessent basically accused Powell of hiking too late because he was waiting for Biden to confirm his reappointment first 🧨

Comments

ddtarsy.bsky.social•96 days ago

There's evidence of causation here or is this an observation of simultaneous events? It's a pretty big accusation to make within central banking circles.

conorsen.bsky.social•96 days ago

It wasn’t anything nefarious, they just understandably felt like they couldn’t lay out a liftoff plan until they knew who would be leading the Fed.

lorenfox.bsky.social•96 days ago

Not understandable, if they truly felt a rate hike was needed at that point. This is a Powell problem, not a Warren problem.

This obsession with optics that don't matter beyond the Beltway mixed with consequence-free "norms" is going to one day lead to a nutcase being elected president.

estebanenchilada.bsky.social•96 days ago

I thought this at the time. Couldn’t see any other reason why he was slow walking tightening.

conorsen.bsky.social•96 days ago

We were all talking about it at the time, it made sense.

frenchbully.bsky.social•96 days ago

Yeah, what would have happened if he raised quickly? I also find this all fairly disingenuous too, they should have raised rates in 2017/18/19 before we even had COVID.

estebanenchilada.bsky.social•96 days ago

He might not have gotten reappointed, but with 20/20 hindsight we now know the economy wasn’t sensitive to short rates going up due to mortgages and corporate bonds locked in at low rates.

frenchbully.bsky.social•96 days ago

Good point. There is going to be a lot of hindsight bias goin on about this stuff. I have felt that the Fed should have raised before COVID even though I gladly took advantage of the low rates to refi.

robredotruthe.bsky.social•96 days ago

true...but we also know inflation wasn't caused by some undesirable surge in demand....

...and if it wasn't; q is what was the point in raising rates?

estebanenchilada.bsky.social•96 days ago

There isn’t much consensus as far as I can tell on how much was demand vs supply shocks. My sense is it was mostly transitory due to supply shocks, but on a longer timeframe than the Fed expected. At some point they couldn’t wait any longer. It became untenable to do nothing when CPI was at 9%.

robredotruthe.bsky.social•96 days ago

i mean, this could have happened...if we believe powell thought rate rises were necessary; but that keeping his job was more desirable....which is quite a big if.

but do you champ

jamesdcos.bsky.social•96 days ago

NJ/VA off-year elections ---> inflation scare hits the political newswire ----> Biden/Powell meeting shortly after where he's told take care of inflation whatever it takes and I'll re-nominate you ---> Fed starts talking very mawkishly

All in a span of 3 weeks

memphis11.bsky.social•96 days ago

Why are those linked?

thegonch.bsky.social•96 days ago

So was the delay caused by Warren, Powell, or the entire Fed??

danhusko.bsky.social•96 days ago

Warren calling him a dangerous man…Those who accused him of trying to induce a global coordinated recession when he did hike look pretty foolish

mjb1286.bsky.social•96 days ago

I seem to remember that the Omnicron variant might have played a factor 🤷🏼‍♂️

we-are-toast.bsky.social•96 days ago

The inflation was transitory due to supply chain disruptions and a longer than expected repair. The Fed's actions, designed to slow the economy and increase unemployment did neither and had very limited impact on the transitory inflation.

mathewjoseph.bsky.social•95 days ago

Jay Powell himself kept repeating ‘inflation is transitory’ which didn’t help either.

Comments

Posting Rules

Reply