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Comment by seydor | Hacker News Reader

Can we change the title to "fight employment" ?

This argument is tiring. The massive unprecedented drop in unemployment was the result of loose monetary policy. In order to properly control the economy there is a certain level of unemployment (something like 6-8% iirc) that is expected at at any given time.

People aren't really "employed" (in a gainful sense) if the money printer keeps printing. Achieving the lowest possible unemployment results in rising inflation because the necessary availability of surplus capital to allow such a thing to happen.

At any rate, 0.75% won't work. The rate changes need to be more aggressive if the goal is to actually avoid a 2023/2024 catastrophe. It takes upwards of 10 years for inflation to cool off after the process of reducing it begins. We're in for a long ride.

It's all too little too late. Considering the scale of monetary easing in the last 2+ years, this is like pissing in desert. Quite frankly, I can't blame the market for being skeptical of Powell's "resolve." He did an about face in 2019 with the taper tantrum.

I don't see any 'fight' when interest rate at 6% points below inflation. Yes, 0.75% is not enough.

With massive deficits and public/private debt, raising more would cause a chain reaction of defaults. I wouldn't like to be in Powell's shoes. Can't control spending, can't control war, can't control commodities, can only raise rates but not too much. And will be the scapegoat, for sure.

As he should be, in my opinion. We should've entered a mild recession in 2018 but because of TPTB he went whole hog on cutting rates as low as possible. We didn't enter the recession, and as luck would have it a global catastrophe happened. This resulted in more rate cutting to the point the rates could not be cut anymore.

He could've avoided some of this by just intelligently working the market. It is, in my eyes, entirely his fault.

TPTB was discussing firing Powell following the rate hikes. Not clear if it would have been possible, not clear that it wouldn't. "Entirely [Powell's] fault" may be the right diagnosis, but I'd say political leadership matters a lot here.

The 10 year breakeven inflation rate is below 2.5%, showing the market does not agree with you on how one successfully fights inflation and expects inflation to plumit.

Powell has repeatedly, and explicitly stated that softening the labor market is required for fighting inflation and that, while this is not good, it is preferable to the consequences of not fighting it.

I mean, “inflation” is what the article claims. To change it would be to editorialize (by admin decree, even). Although I guess you’re joking.

High employment means nothing when inflation is eating all the wage gains and then some.

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