Friends, today let's talk about something serious.
The people at the Federal Reserve, after five years, conducted an 'epic experiment' with a name that sounds quite intimidating—it's called 'Flexible Average Inflation Targeting.' To put it simply: Inflation can spike temporarily, no problem; the hotter the job market, the better; definitely no rate hikes in advance!
What was the result? It blew up.
Inflation didn't turn out to be 'mild' as they said; it directly soared to a 40-year high. Ordinary people are dumbfounded while buying groceries, gasoline, and paying mortgages. If you take a stroll around the supermarket now, the price tags can scare you to death.
Powell is scheduled to speak this Friday at the annual party of economic bigwigs in Jackson Hole.
To put it bluntly, it's just a large-scale patch-up operation.
He has to explain why the policies that were praised to the skies back then have now turned into a large-scale disaster? What's worse is that he has to shift the blame without being too obvious—he can't just say, 'Sorry, we messed up your wallet,' right?
Some experts are now jumping out to say: No, no, no, the framework is fine; we 'predicted wrong.'
I was amused after listening to it.
You have the most comprehensive economic data, the most brains, and the loudest microphones in the world, yet your predictions are as wrong as those of a grassroots stock god? This is called shifting blame, not reflection.
What's even more outrageous is that they didn't raise rates until March 2022.
The fire was already burning to the roof, and they were still saying, 'Let's wait and see if it's temporary.'
What does 'temporary' mean? It means those days when your salary doesn't keep up with prices, and your savings are losing value!
What they're afraid of is not inflation, but a market crash;
What they care about is not the purchasing power of ordinary people, but whether their theories can hold water.
In 2013, during a 'taper tantrum,' you have now been scared to the bone—you don't dare to touch interest rates or reduce liquidity, and as a result, you ended up creating a bigger bomb.
This set of policies isn't working anymore; it's time for a change.
But guess what?
They still don't have confidence in the next framework.
If there's another pandemic-level shock, or a war, a supply chain collapse, or an energy crisis... what are these people preparing to do?
Keep feeling their way across the river—then let the people on the other side bear the cost?
Do you think Powell's speech this time is a sincere admission of error, or is it just a performance for the world?
If he turns around and says, 'We might loosen again in the future,' can you still swallow that?