The Fed Owes The American People Some Plain-Speaking

Financial Times Header

This week financiers’ eyes have been firmly fixed on the Federal Reserve. No wonder. On Wednesday the US central bank raised rates at the most aggressive pace for 22 years, as Jay Powell, Fed chair, finally acknowledged the obvious: inflation is “much too high”.

But as investors parse Powell’s words, they should spare a thought for a central bank on the other side of the world: the Reserve Bank of New Zealand.

In recent years, this tiddler has often been an unlikely harbinger of bigger global trends. In the late 20th century, for instance, the RBNZ pioneered inflation targeting. More recently, it embraced climate reporting ahead of most peers.

Last year, it started tightening policy before most counterparts. And this week it went further: its latest financial stability report warns of a “plausible” chance of a “disorderly” decline in house prices, as the era of free money ends.

Unsurprisingly, the RBNZ also said it hopes to avoid a destabilising crash. But the key point is this: the Kiwi central bankers know they have an asset bubble on their hands, since property prices have jumped 45 per cent higher in the last two years and “are still estimated to be above sustainable levels”. This reflects both ultra-low rates and dismally bad domestic housing policies.

And it is now telling the public and politicians that this bubble needs to deflate, hopefully smoothly. There is no longer a Kiwi “put” — or a central bank safety net to avoid price falls.

If only the Fed would be as honest and direct. On Wednesday Powell tried to engage in some plain speaking, by telling the American people that inflation was creating “significant hardship” and that rates would need to rise “expeditiously” to crush this. He also declared “tremendous admiration” for his predecessor Paul Volcker, who hiked rates to tackle inflation five decades ago, even at the cost of a recession.

However, what Powell did not do was discuss asset prices — let alone admit that these have recently been so inflated by cheap money that they are likely to fall as policy shifts.

By Gillian Tett

Read Full Article

The Thinking Conservative
The Thinking Conservativehttps://www.thethinkingconservative.com/
The goal of THE THINKING CONSERVATIVE is to help us educate ourselves on conservative topics of importance to our freedom and our pursuit of happiness. We do this by sharing conservative opinions on all kinds of subjects, from all types of people, and all kinds of media, in a way that will challenge our perceptions and help us to make educated choices.

Columns

Can Ramaphosa and Trump Come to Terms?

Whether South Africa can quell the hostility emanating from Washington, without compromising on its national priorities, is a formidable test for a country

Maddened Europe

Viable prospects for peaceful settlement of conflict between Moscow and Kyiv exist, but Europe obsesses over threat of incursion onto European territory.

BOMBSHELL: DOGE Proves Democrats Guilty of Election Fraud!

As the old expression goes, “That didn’t take long!” Over...

Tariffs Will Make America Rich Again

The US won World War II because we could outproduce our enemies, Peter Navarro explained, and the American “arsenal of democracy” permitted the Allies to triumph.

America’s sport export

The popularity of baseball in Japan and Korea contrasts to a shrinking American audience where the average age of your MLB fan is a 57-year-old Caucasian man. 

News

FTC Chairman Raises Concerns Over Sale of 23andMe DNA Data

FTC said it was worried about the safety of the personal data of Americans who were previously customers of genetic testing company 23andMe.

Judge Dismisses COVID Lawsuit Against Former New York Gov. Cuomo

Judge dismissed class-action lawsuit against former Gov. Andrew Cuomo that blamed his admin for COVID-19 deaths in nursing homes across NY.

Tesla Firebombing Suspect Hit With Federal Charges

The U.S. Dept of Justice has filed federal charges against a suspect in connection with a firebombing attack on a Tesla dealership in Loveland, Colorado.

What to Expect From Trump’s Global Tariffs

Trump has dubbed April 2 “Liberation Day,” when he will unveil reciprocal tariffs to level the trading field between the United States and its 200 partners.

Voters Head to Polls in 3 Key Elections in Florida, Wisconsin: What to Watch For

On April 1, voters head to the polls for three races in Florida and Wisconsin, with substantial implications for the future beyond the current contests.

DNC, Schumer Sue Trump Over Order Targeting Illegal Immigrant Voting

DNC and two top U.S. lawmakers sued President Trump over a recent EO that aims to enforce the law against illegal immigrant voting and election dates.

Court Halts Trump Admin’s Move to Revoke Protected Status of Venezuelans

Federal judge in CA put a pause on the Trump admin’s plan to terminate TPS of 350,000 Venezuelan immigrants, whose legal status was set to expire on April 7.
spot_img

Related Articles

Popular Categories

MAGA Business Central