Hey guys, it's Sasha Jerome Powell Just spoke in a monkey event in Jackson Hole to outline how really tough he is on inflation. over the 12 months through. July, Measures of headline and core Pce inflation have run at 4.2 percent and 3.6 percent, respectively, well above our two percent longer run objective. Businesses and consumers widely report upward pressure on white prices and wages.

Inflation at these levels is, of course, a cause for concern, but that concern is tempered by a number of factors that that suggest that these elevated readings are likely to prove temporary. The spike in inflation is so far, largely the product of a relatively narrow group of goods and services that have been directly affected by the pandemic and the reopening of the economy. And from long experience, we expect the inflation effects of these increases to be transitory. These effects, which are adding a few tenths to measured inflation, should wash out over time.

Oops, Sorry. This clip is actually from Jerome Powell's 2021 speech in Jackson Hole exactly two years ago. In the run-up to that speech, the latest inflation data at the time in the US was at 5.4 percent. It had increased from 1.4 in January 2021 to 5.4 in July 2021, much higher than the 3.2 level of inflation.

Today, all the indicators at the time were showing a huge risk of runaway inflation. All the numbers were pointing upwards. The interest rates in the United States at that point was just above zero percent, and the FED did not increase rate for another seven months. After this point.

today, the interest rate is at 5.5 percent instead of zero. The inflation trajectory is down while inflation was rapidly increasing two years ago, and the actual rate of inflation is at 3.2 percent, much lower than it was back then. The only thing that is not falling in terms of inflation today is Shelter, which is a lagging indicator, but house prices are falling, rent inflation is collapsing, and the only reason housing costs are not falling is drum roll High interest rates. So the only metric within U.S Inflation that is high is shelter.

the only meaningful metric. The FED is busy fighting inflation by increasing interest rates. Increasing interest rates, by the way, make mortgages more expensive and have an upward pressure on the whole trajectory. So we have a case of the snake eating its own tail.

In today's speech, Jerome Powell said inflation is too high. We have Titan policies significantly over the past year. Although inflation has moved down from its peak a welcome development, it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.

According to Jerome Powell inflation that is now more than two percent lower than the Fed's interest rate and has fallen from 9.1 percent to 3.2 percent in the last year is stubborn and sticky. and the FED is apparently going to do another increase in September or in November. and everyone's pretty certain because according to the FED, 3.2 percent is still way too high. But there are three really major problems with your own power statement.

First, the claim that inflation is high is false, and the FED doesn't actually seem to really understand the numbers that they are meant to be regulating the latest U.S inflation data has an average inflation rate of 3.2 percent and a core inflation rate at 4.7 percent. You can see that the last two months both of these have only gonna buy 0.2 percent, which is bang in line with the FED long-term objective they're already performing at that level. But then if you dig deeper, you can see that Shelter is sitting at seven point seven percent because it is a lagging indicator and because of the high interest rates. not because of any actual underlying problems, not because of an actual upward pressure on pricing.

And in supplementary data to the inflation data, you can see that Shelter makes up 34.7 percent of total inflation and core inflation is 79.6 of the total. So Shelter is 43.6 of core inflation, which is apparently the figure that these guys really care about. And if you do the numbers and I know I know it's difficult and involves calculators. If you exclude shelter, the sum of the rest of the U.S inflation, everything else in total added together is 0.8 percent.

So everything put together except shelter is currently sitting at 0.8 and Shelter is at 7.7 Pulling the whole thing up to 3.2 on average, and core inflation if you exclude shelter is at 2.4 So if you ignore the shelter bit, if you kind of put it to the side, the rest of inflation is done. It is bang. Where the FED apparently wants it to be at his bank, where everyone was waiting for it to be. It is already there.

But what is going on with Shelter then? Well, let's look at the real underlying data. Rent inflation was sitting at 12 to 15 during Covid ridiculously high, and Shelter is now catching up to that. but that is an artificial thought in the data. You can see that right now, rent inflation has already fallen to four to five percent.

And the technical term for this sort of trend is it's going down. And here is the data from the St Louis fed on house prices in the United States. The last two quarters have seen the biggest drop in the price of houses since this data started being recorded 60 years ago in 1963. So yeah, the rest of inflation Without Shelter is already at 0.8 percent, and shelter right now is collapsing.

In real terms, In real data in numbers, that actually are important if you ignore the lag effect and the impact of interest rates, Shelter is currently trending negative. So Jerome Powell saying that inflation is too high is unfortunately just full of and I know that there will be people in the comments section saying that I just don't get it because I say that the FED is incompetent. but actually actually this is all exactly what they're wanting to do. This is all part of the plan.

The World Economic Forum Agenda of You will own nothing and be happy. Unfortunately, if that is the agenda, if that is what they wanted to do all along, they could have been increasing rates and double time several years ago already and I am normally not in the habit of attributing complex strategic malaise where being complete idiot is a far more probable and better explanation. I Would not give these riddle done from the Fed so much credit as to pretend that they are so smart orchestrating some kind of giant plan and a massive conspiracy theory involving huge numbers of people. Dumbasses tend to do dumbass things so we can see that inflation is already under two percent in the real world in the United States But why is two percent itself even important? The answer is it isn't German Powers Repeatedly said that the FED will not budge on this two percent.

Target but the two percent Target is made up. There is no actual objective for the inflation rate to be at two percent. Nobody has ever said that That should be the case. There is no law, no official document, no Proclamation from anywhere that two percent is the magic figure.

It is just a figure that the FED produced from their ass many years ago on every chair. Since then, just repeated the same number without bothering to actually think to. actually, you know, use the brain as to why Is it to why? Specifically is two percent better than say 2.5 percent or three percent. Or maybe one percent.

What is the specific economic rationale as to why that is a particular number? The answer is, you know what the answer is. There is is just a pile of horseshit that makes no sense. And then there is an even more important Point. Let's say that you ignore everything that I just said.

Let's say you don't have a functioning brain and you think that inflation is still way too high and you think that it needs to go to exactly precisely. Bang on two percent. What is the rationale for going there as quickly as possible when inflation was setting under two percent. Did the FED take urgent action at increasing it so that it goes back up to two percent? If not, well, why didn't they? Given that we can see from the data that all the numbers in the US in terms of inflation are headed in the right direction.

Why is reaching two percent, Say in October by Shocking The economy better than reaching it, Say in January and not destroying the livelihoods and millions of people in the process. You know when you're sitting in a traffic jam and there is that one idiot who sees the current front move a little bit and then they accelerate sharply for no reason. And then they slam the brakes on two seconds later. and then they weave in and out of the lanes because they can see that that one's moving a little bit faster.

Oh no, now that one's moving a little bit faster. And then a few minutes later you see that same person in your rear view mirror while you casually relax, listen to some music, stayed in your lane and slowly moved along with everybody else. Well, that is the behavior that the FED is exhibiting Now, not your behavior that idiot's Behavior You can already see that the numbers all look right. If you bother to actually do analysis to beat inflation, you could go and slam on the brakes.

You could spill coffee all over your lap. Wear your brakes out for no reason. Everyone around you will think that you're an imbecile, you will cost millions of people their jobs, or you could move along gradually, not break stuff for no particular reason. The net effect will be exactly the same.

Actually, the net effect would be better. CNBC and social media are once again talking about the biggest recession ever that is 100 definitely about to hit. This is about the 17th time that we're hearing this over the last two years. The stock market is jittery.

Once again, we're seeing big daily swings. Yesterday the market went down massively. today went up. Investors are not sure what the actual is going going on except for the eight to ten stocks that are moving up from the AI bubble.

The rest of the stock market is still sitting at multi-year lows after the stock market dropped over the last two years. Most people don't really appreciate this fact. Interest debt payments for the US are now to record 19.5 of the revenue that the US government earns. and this means that one in five dollars that the United States collects in taxes is now being spent on paying interest on the debt because the interest rates are going up and so this number might actually increase.

But even worse than that, the potential consequences of over tightening are much worse than the inflation that the over tightening is trying to beat because the FED up so bad in 2021. They are doing everything now that they can to prevent themselves as being tough as being the people that know what they're doing. they're in control. A classic case of their egos driving policy policy decisions instead of data.

But will these idiots say go to prison if they are gone Migos and tanks on the back of going way too far for no good reason. A normal Bank executive would get prison time and their assets would be seized if they are intentionally negligent if they go and screw up against what they should be doing. But I guess screwing up an entire country is not such a big deal, so who cares? Let's keep increasing interest rates because it looks badass and it makes your own power feel like he has a pair every time the FED up they go and whip out that nobody could have seen it coming line and the worst thing that will happen is you know he'll have to sit in for a few minutes in front of the Senate panel who will give him a Stern telling of oh no, there is Zero accountability The members of the Federal Open Market Committee repeatedly make statements that show that they don't actually understand what it is that they're actually doing and the whole world is watching what some old dude who is severely analytically challenged says at a rich Banker Meetup in Jackson Hole because we live in a world where that is more important apparently then the actual performance of the economy. An actual real data.

.