Federal Reserve Watch: Is the Fed bluffing?

Seeking Alpha/John M. Mason/8-19-2022

“Headlines in the Wall Street Journal on Friday read, ‘Wall Street Bets The Fed Is Bluffing In High-Stakes Inflation Game.’… To respond, the Fed sends out members of the Federal Open Market Committee to talk up the Fed’s commitment to fighting inflation and doing what is necessary to achieve the victory.”

USAGOLD note: Jawboning has limited staying power, particularly when one takes into account that the so-called messengers Mason references are simply stating their own views on where the Fed should be headed. Sooner or later, the market will be forced to factor in what the Fed does, not what the messengers say. On that score, he presents a number of charts and concludes the Fed’s actions are “confusing investors and market analysts.” Mason ends with a reference to Henry Kaufman’s recent criticism that the Fed is “failing to combat inflation with the resolve displayed by Paul Volcker.” In short, the central bank is bluffing.

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