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“Inflation is Half Our Mandate” and Other Amusing Quotes of the Day

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29 comments on “Inflation is Half Our Mandate” and Other Amusing Quotes of the Day

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In a news conference following last Wednesday’s FOMC meeting, Fed Chair Jerome Powell inadvertently admitted “Inflation is half our mandate.” 

He quickly corrected that to “Price stability is half our mandate.”  

The second statement is factually correct but in practice the Fed follows Powell’s first statement. 

The Fed wants anything but price stability. Here’s the clip.

https://twitter.com/VlanciPictures/status/1421512211621625867

Other Inflation Quotes of the Day

John Mauldin compiled an interesting set of quotes in his missive last Friday: Policy Errors Have Consequences. 

  • “T.S. Eliot once wrote, ‘Only those who risk going too far can possibly find out how far one can go.’ It seems the US financial system is bound and determined to find out.” John Hussman, July 29, 2021
  • “If I was Darth Vader and I wanted to destroy the US economy, I would do aggressive spending in the middle of an already hot economy… What are you going to get out of this? You’re going to get a sugar high, the higher inflation, then an economic bust.” —Stanley Druckenmiller, July 23, 2021
  • “It’s not riding the tiger that is the problem, it’s the dismount.” John Mauldin, July 30, 2021

Mish’s Observations On Prices

  • “The Fed’s preferred measure of inflation is nearly as consistent as the returns of Bernie Madoff.” Mish, August 2, 2021
  • “Excluding everything that matters, prices are falling.”TM Mish, August 2, 2021

Measures of Inflation

Fed’s Preferred Measure of Inflation

  1. For discussion of my observations and various measures of inflation please see Fed’s Preferred Measure of Inflation is Only 4.0%, Anyone Believe That?
  2. For further discussion of the FOMC news conference, please see Fed Admits Inflation Might be Higher and More Persistent Than They Expect

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AWC
AWC
2 years ago
7-9% inflation (devaluation). It’s a given, over the long run. That’s the nature of fractional reserve fiat money regime’s. Pension actuaries even factor it in. Given that TPTB will never allow outright deflation, they will take the path of least resistance. When inflation gets painful enough, the public will demand the gumnut do something. The Fed will raise rates to “Whip Inflation Now,” complete with little “WIN” buttons. When rates reach 7-9%, or maybe overshoot a bit, the cycle will be complete. After that, the Fed will likely put a floor under rates at, say, 7% and place its inflation “target” in that range, as well. So simple even a Caveman can do it,,,,,even Grandma Yellen and Jerome. 
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Eddie_T
Eddie_T
2 years ago
I enjoyed the quotes. Let me add a couple you might not have seen.
“Inflation is taxation without legislation”
                     —- Milton Friedman
“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”
                        —- Vladimir Lenin
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Doug78
Doug78
2 years ago
You get what you vote for. Where is the surprise?
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Eddie_T
Eddie_T
2 years ago
Reply to  Doug78
We had no choice, really. We could have voted for the man who would be king. 
You know, the one who made a habit of collecting contributions and then syphoning them into his private business accounts.
He’s been doing it to some degree since 2016….., and he’s still doing it. I thought that was supposed to be HIGHLY illegal….but apparently if you’re arrogant enough, you can get away with it.
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Doug78
Doug78
2 years ago
Reply to  Eddie_T
You always have a choice. You don’t have to vote a straight ticket either. Now we have the almost certainty of having several trillion Dollars going to pork projects, CRT in schools and police defunding. All that was clear before the election but there was magical thinking going on that somehow Joe was a moderate. For me there was no surprise.
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Eddie_T
Eddie_T
2 years ago
Reply to  Doug78
My only consideration was that if  I voted for Biden, I had a ghost of a chance of getting rid of the worst POTUS in history. A true demagogue with no conscience, zero moral scruples, and a complete willingness to break all the rules and end democratic government altogether in this country.
That WAS the effin’ choice. Don’t kid yourself that it wasn’t.
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Pacioli
Pacioli
2 years ago
Reply to  Eddie_T
Does anyone else see the irony in a Biden supporter trying to decry a lack of “conscience, zero moral scruples, and a complete willingness to break all the rules” ?!?  
I can’t think of a more corrupt collection of blatant filth than that which has been uncovered in the Biden family. Much less a sitting president who doesn’t know what planet he’s on. 
Doug’s not saying you should have voted for Trump. He’s saying you didn’t have to vote for Biden. I’m not a huge Trump advocate either. But his accomplishments while in office were undeniable (strong economy, strong borders, lower taxes for the gov’t to squander, law & order, promotion of family values, etc..) Don’t believe everything you hear in the MSM.
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Doug78
Doug78
2 years ago
Reply to  Eddie_T
The choice was clear to me. I don’t like Trump nor his style but Biden and the Democrats today are worse than worse. Look at what is happening. Is there one thing you like seeing? He wasn’t the best PONTUS but what we have now is not a PONTUS at all but a ghost. The ones running the country now is the bureaucracy and they are as always on autopilot and behind the curve. Knowing how Biden is handling or more correctly not handling things, would you vote for him in the next election? If yes then you are a Democrat for life.
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Eddie_T
Eddie_T
2 years ago
Reply to  Doug78
I don’t like Biden and have no intention of defending him. But…I do have conviction that if he lost an election he wouldn’t try to stage a coup.
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RonJ
RonJ
2 years ago
Reply to  Eddie_T
The coup was against Trump. Four years long.
While the final forensic audit result has not been made yet, there are apparently some 74,000 mail in ballots that were never mailed in, in Arizona.
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Doug78
Doug78
2 years ago
Reply to  Eddie_T
The coup had already taken place before and Biden is in it as a figurehead. 
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Eddie_T
Eddie_T
2 years ago
Reply to  Doug78
Biden is a party hack whose state is certainly worse off for his Senate tenure. He’s a crappy president…but coup?  Forty-five Presidents…and only one….Trump…tried to throw an election. That’s what will be written into history.
And he is still a threat, in spite of what Mish thinks.
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Doug78
Doug78
2 years ago
Reply to  Eddie_T
You and me are old enough to have seen how coups are done. There has been a lot of them and failed coups don’t look like this. The FBI and others are investigating. Let’s see what they come up with. It might end up like the “Russian Collusion” investigation. In the meantime it’s a way to detract the Democrat base from the disaster going on now.
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conservativeprof
conservativeprof
2 years ago
The Fed is just a side show in this travesty. The Fed is being wagged by the Democrat dog. The Democrat dog wants dramatic (even at these incredible levels) increases in government spending. Interest rates used to be the major tool used by the Fed. Interest rate increases except for minor adjustments are off the table. What will be the impact of dramatic increases in government spending and Democrat control of the economy? I see a non competitive (in a global sense) economy with less incentives to produce (and work), much higher energy prices (and perhaps much less reliability in the grid), much less incentive to invest (steep effective tax rates), and much more regulation. These impacts will happen gradually over the next 10 to 15 years unless Democrat plans can be stopped in the coming year.
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Eddie_T
Eddie_T
2 years ago
I see my comment got deleted…..I guess because I posted a link to a WSJ article. Dunno.
I will repeat the gist of it. What is about to happen is that those of us who were lucky enough to pick assets to hold that have beaten inflation…..are going to get taken to the cleaners if the Biden Administration manages to get the capital gains rates they want….much of our paper gains will go to tax.
Step one…..destroy the buying power of our savings. Step two…..over-tax capital gains to strip investors of  the gains from their successful hedges.
Do the math. It’s going to be pretty easy to go from being a winner to being a bag holder.
The article I was referencing was an op ed in the WSJ on July 18th titled “The Inflation Tax on Capital.” Worth a read, if you have not seen it.
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RonJ
RonJ
2 years ago
Reply to  Eddie_T
The plan of the World Economic Forum, is for the common people to own nothing and be happy. Common people won’t have assets anymore.
Martin Armstrong recently pointed out a story by Tim Wallace, in The Telegraph, stating that  the Bank of England has called on ministers to decide whether a central bank digital currency should be programmable, to limit what recipient can spend it on,  to such as essential goods.
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Maximus_Minimus
Maximus_Minimus
2 years ago
Reply to  Eddie_T
Somebody has to pay for massive deficits, the FED cannot buy the all debt forever. It’s not a plan, it’s a necessity. There is no adult in charge.
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KidHorn
KidHorn
2 years ago
Reply to  Eddie_T
Oh come on. Do you really think people will stop investing if they have to pay say 28% in taxes instead of 20%?
Reminds me of the argument against price controls on drugs. Those against it say companies will stop making new drugs. What BS. As if the drug companies would shutter if they can only make $10b/yr instead of $20b/yr.
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TexasTim65
TexasTim65
2 years ago
Reply to  KidHorn
They won’t stop. Eddie didn’t say that at all.
He just said they changing rules and back dating the change to screw anyone who was a winner. Thats dirty.  Changing only going forward would be fair.
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Eddie_T
Eddie_T
2 years ago
Reply to  KidHorn
Please go read the article I referenced. It says it better than I could. Don’t be lazy. Do the math to see how that affects the gain on an asset held for a number years.  It’s actually fairly shocking.
Guys like me pay 28% now. Biden wants to raise capital gains to max out at 39.6% for high earners.
Guess what…Higher earners are mostly middle class, not the real rich. The real rich use the trick TexasTim mentioned, among others.
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TexasTim65
TexasTim65
2 years ago
Reply to  Eddie_T
Your post is in the next thread on this site. I replied there and posting here again.
Iwill indeed for the middle class.
For the rich, they will instead borrow against the value of the asset and pay only the borrowing cost (1-2%) instead of the higher tax cost. Eventually they will turn over the asset against the loan balance so in effect they never pay the capital gains tax. Presumably this is what you plan to do with your investment homes.
The other thing that’s annoying about capital gains tax is that you can’t adjust out the cost of inflation. By that I mean if you hold a stock for 10 years and it gains 25% and inflation over the same time frame (10 years) is 25% then it should be a net 0 since the value of the money is the same now as it was 10 years ago. Yet you have to pay tax on the 25% so in effect you lost money. It’s why the amount of profit you need on an investment has to be more than the price of inflation just to keep treading water.
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RonJ
RonJ
2 years ago
Yes, the FED is violating its mandate. The problem is that we have a corrupt government which does not enforce the FED mandate.
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ThaomasH
ThaomasH
2 years ago
The fed has estimated that 2% p.a. of the PCE is the best trade off between facilitating relative price changes when some prices are downwardly sticky and predictability of relative prices in the long run.  That is the “price stability” half of their mandate. 

How does Mish think the Fed should make this trade off?  A different index?  A different rate?  

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Mish
Mish
2 years ago
Reply to  ThaomasH
There should not be a Fed
End of problem
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Maximus_Minimus
Maximus_Minimus
2 years ago
Reply to  Mish
Neither any institution that self defines what its mandate is, when it sets its pants on fire.
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thimk
thimk
2 years ago
Paging Paul Volcker , pickup on line one.  Ya more government spending in a inflationary environment makes perfect sense to me ./s 
The omnipotent feds believe they can micromanage the economy/dollar/funding  without any interest rate increases .  That’s a first isn’t it ? . Highway to the danger zone.   
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ed_retired_actuary
ed_retired_actuary
2 years ago
The Fed seems to believe that gradually tapering its 120B /month QE over the next year or two (after 1st giving the markets lots of warning) is a responsible 1st step to controlling inflation.  However, with a still increasing huge pool of base money remaining, the Fed is hardly considering the lagged impact on inflation of a) unprecedented base money to GDP, b) 0 short term interest rates, c) unprecedently large peacetime Federal deficits / GDP with no end in sight.  Perhaps they consider departing from their arrogant guidance of several years of extreme stimulus to be more shameful than risking years of  high inflation that will be very painful to control, assuming that they even seriously try.
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RonJ
RonJ
2 years ago
Reply to  ed_retired_actuary
“The Fed seems to believe that gradually tapering its 120B /month QE over
the next year or two (after 1st giving the markets lots of warning) is a
responsible 1st step to controlling inflation.”
Why does the Fed even need to give warning? The markets are going to adjust whether they get a warning or not.
Pumping 120B/month, the FED isn’t controlling inflation. In the mid 1970’s Alan Greenspan’s idea of controlling inflation, was printing up “Whip Inflation Now” buttons. They failed miserably.
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KidHorn
KidHorn
2 years ago
The FEDs mandates are to keep equity prices inflated and fund federal deficits. Fighting inflation would only be a mandate if it had an effect on the two previously mentioned mandates.
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