So, I have read multiple things from the fed communication yesterday. A couple of things that stood out to me:

1.) Sounds like they are going to let inflation spike again and call it "transitory".
2.) I believe he made some statement about "We are going to try to isolate the tariff inflation from the "real inflation".

Is this not worrisome to folks? It sort of makes me wonder if they are all dumb or if they think the American public is dumb. Isn't inflation - inflation? Regardless of the source? Where I see this headed is another step function in prices like we saw back post covid. It will be labelled "transitory".

I really think the game plan will then be to send out another round of "stimulus" checks, thus creating more inflation and further eroding wealth by devaluing the dollar. The name of the game is now continued fast track inflation from here on out. Thoughts?

Regarding point #2, I believe a reporter asked how much of inflation is due to tariffs, and JP said it is very hard to determine what is from tariffs and what is "real". I was only paying half attention though.

I remember the last time something was transitory.

I think the Fed/MMT should be abolished, so I'm last guy to defend Powel.

That said, a reporter invoked the term "transitory", it wasn't part of Powel's prepared remarks, he just responded acknowledging he thought tarriff impact would be transitory.

Also, the term "transitory" just means not permanent. So its subjective on timeframe. COVID related inflation proved to actually be transitory, as the core impact only lasted a couple years. The problem is that it was such a political hot topic, with a lower monthly timeline becoming interpretation "transitory".....so then the Fed dropped the term, and everyone spiked the football as if it was some major blunder.

Tarriff impact could be transitory in same way, but likely not peaking as high. You can contrast COVID inflation and possible tarriff inflation with a decade long avg inflation rate of 7% in 70s. Then all of the sudden "transitory" doesn't seem so wrong.

MillionaireSock said:

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The American Public is Dumb.

Or at least, has no clue how the economy actually works.

One of the tools that the Fed has to control inflation is the way they talk about inflation. If they said "inflation is coming", anyone who only reads a headline but has half a brain would say "I'm gonna go buy a bunch of stuff now before it gets expensive", and that then becomes a self fulfilling prophecy.

Just because the Fed says something, doesn't mean they believe it. It means it is what they believe the least damaging headline will be

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The problem with your assumption is it requires people to have the funds to "buy a bunch of stuff". That is most likely a bad assumption for some at the bottom of the middle class and those below the poverty line.

Quote:

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Federal Reserve Chair Jerome Powell admitted tariffs have added increased uncertainty to the outlook. He added that the most likely outcome is that higher inflation in 2025 will be a "transitory" impact from tariffs.
"I think that's kind of the base case," Powell said. "But as I said, we really can't know that. We're going to have to see how things actually work out."

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My interpretation is that Powell is hoping the stupidity is transitory.