Yo Pit Crazies,

In case you have been living under a rock, Jerome Powell is the chairman of the Federal Reserve Board of Governors. That body is responsible for setting interest rates in a way that preserves full employment while targeting an inflation rate of roughly 2%.

Now the unemployment rate is around 4.3% and pre-covid was in the 3.5% range. That’s still incredibly low by historic standards.

Yet the government always finds a way to complicate things.

Maine and many other states still have “help wanted” signs all over. This, even though more than 7.4 million Americans are unemployed.

What’s happening? Generous state unemployment benefits are incentivizing people to stay home.

That is not sustainable over the long-term.  

It is also an issue since the Federal Government is pouring funds into states to maintain COVID safety net levels except there is one problem: COVID is no longer a problem… but politicians cannot say no.

This leads to a cycle of deficit spending that makes it hard for the Fed to keep its second mandate: 2% inflation. We have not seen inflation that low since 2020.

Even though Powell says his worry is persistent inflation, cutting interest rates while price indexes rise tells a different story. 

With Powell pretending to control inflation and the U.S. Government going into trillions of debt, higher inflation is coming at us like a 1 way freight train.

This is where that train is going…