Retirement Fund Advisor: The Fed's Claim That Inflation Was "Transitory" Is the Worst Call It Ever Made

Mohammad El-Erian is the chief economic advisor to Allianz, a retirement and annuity investment group.

He calls this the worst call the Fed ever made as the Producer Price Index soars to 9.8%, the highest level in 11 years, and consumer inflation soars to the highest level since the peak of the post-Carter (Reagan) inflation of 1982.

Fed officials long had said they expected the inflation surge to be "transitory," as it is being driven by supply chain and demand factors largely associated with the pandemic. However, Fed Chairman Jerome Powell recently said it's time to retire the word as it tends to cause confusion among the public.

El-Erian said the Fed's recognition that price pressures aren't going away is essential to making the proper policy decisions.

"If they catch up now, if they're honest about their mistake and take steps now, they can still regain control of it," he said.

The Regime?

Honest about its mistakes?

You new here, bud? They set you up with a desk already? You got your laminate?

Stay away from the Pepsi machine on the sixth floor. It just eats your dollars.

...

"The characterization of inflation as transitory is probably the worst inflation call in the history of the Federal Reserve, and it results in a high probability of a policy mistake," the former Pimco CEO and current Queens' College president said Sunday on CBS' "Face the Nation."

"So, the Fed must quickly, starting this week, regain control of the inflation narrative and regain its own credibility," he added. "Otherwise, it will become a driver of higher inflation expectations that feed onto themselves."

The Regime working to regain its credibility. LOL, I love this guy.

So adorable.

...

The Federal Open Market Committee, which sets interest rates for the central bank, meets this week amid expectations that it will begin tapping the brakes further on its ultra-easy monetary policy. One important step is the likely decision to increase the pace at which it is cutting its monthly bond purchases, which had been aimed at bolstering the economy and keeping interest rates low.

Keeping interest rates low keeps the prime lenders flooding the country with loans which injects more money into a country already punished by inflation.

And this is because of the Fed's almost-certainly-politicized, almost-certainly-doing-favors-for-Biden characterization of inflation as "transitory."

As CBD and other commenters point out, raising interest rates has a downside which becomes worse and worse the more debt we stack up: We have to pay that interest rate on the bonds we've sold. So raising interest rates makes our incredibly expensive debt service even more absurdly expensive.

It's a pretty little trap The Experts and Ruling Class have made for us.

It would have been better to have avoided a huge inflationary spiral by not, for example, dumping trillions of fake dollars into the economy during a period when there was already bound to be some inflationary pressure due to re-opening.

And it would have been better that, once we did pick up strong inflationary signals, we acknowledged them as real and shaped our actions accordingly instead of engaging in Inflation Denialism to prop up Brandon's bolshevik spending plans.

Had we done that, we would not be faced with the Scylla of dangerous levels of inflation on one hand and the Charybdis of skyrocketing debt service payments on the other.

But President Ice Cream Cone wanted to prove he was more capable of pushing through a hard leftwing program than Obama, and The Regime is all-in on Brandon, so here we are.

Thanks, NeverTrump! Really loving this moderate centrist Adult in the Room you've worked with your Democrat partners to give us!

Maybe I spoke too soon about The Regime refusing to admit its mistake on inflation: noted egotistical manlet monster Paul Krugman, the Miguelito Loveless of Leftwing Partisan Hack Economics, says Whoopsie! on inflation.

A tectonic shift in the world of economics has taken place: New York Times economist Paul Krugman finally admitted that his detractors on inflation were right all along.

The leftist economist surprisingly conceded in a new op-ed that others have warned "that we may face something comparable to the stagflation of the 1970s. And credit where credit is due." Then came the sticker shock: "So far, warnings about inflation have proved right, while Team Transitory's predictions that inflation would quickly fade have been wrong." Talk about eating crow.

Krugman recently conceded Nov. 14 that he "got inflation wrong" even though he tried to hedge by claiming he thought blindly believing the false "transitory" inflation narrative was "still the best bet." His latest concession puts him even further at odds with his Nov. 11 column: "History Says Don't Panic About Inflation." National Review senior political correspondent Jim Geraghty documented at least six times throughout 2021 where Krugman has tried to downplay or dismiss the threat of spiking inflation.

The public intuits, quite correctly, that Brandon is making inflation worse.

A new Fox Business poll finds that when it comes to rising prices, twice as many think the Biden administration's actions are hurting rather than helping.

In addition, by a 25-point margin, voters believe President Biden's proposed social spending plan would push inflation higher and by 6 points they think it would hurt the economy.

"One thing the president has going for him is low expectations," says Democratic pollster Chris Anderson, who along with Republican counterpart Daron Shaw, conducts Fox polls. "If the spending plans start to have positive impacts in people's lives, maybe some will reconsider their view of Biden."

I.

Love.

It.

Their big advantage, they say, is that the public's conception of Biden as highly incompetent and a malign influence in their lives means if he manages to even do something slightly non-destructive they'll have a better opinion of him.

I suppose that's true. If a snake doesn't bite me, I do think, "Oh, that snake wasn't so bad."

I wouldn't go braggin' that all over town, though!

posted by Ace at 03:40 PM

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