The Fed’s Battle Against Inflation: A Closer Look
There has been ongoing debate surrounding the Federal Reserve’s efforts to combat inflation. Critics argue that interest rates are either too high, risking a recession, or too low, leading to difficult-to-control inflation. The recent Consumer Price Index (CPI) print, which came in higher than expected, caused a temporary decline in stock prices, commodities, and cryptocurrencies. One expert, Gordon Johnson of GLJ Research, blames Jerome Powell and Janet Yellen for this outcome.
The Worst of the Crisis is Yet to Come
Gordon Johnson has long warned that the current approach taken by U.S. authorities will only provide temporary relief from inflation. He compared the current situation to the financial climate between 1966 and 1982 and predicted that prices will surge again, leading to inflation reaching levels well above the 9.1% recorded in 2022 by 2028.
In January, Johnson reiterated his point on Twitter, stating that by loosening financial conditions and pumping liquidity into private hands while pushing stocks higher daily, the Federal Reserve and U.S. Treasury are guaranteeing a worsening crisis.
‘If King Croesus Crosses the Halys River, a Great Empire Will Be Destroyed’
Jerome Powell’s speeches after Federal Open Market Committee (FOMC) meetings have been criticized for their vagueness, leaving analysts to decipher any signals of potential interest rate cuts. However, in December 2023, Powell made relatively decisive statements regarding rate cuts—though he appeared to backtrack on his stance within two weeks.
Johnson noted that one contributing factor to the inflation increase was Powell’s mention of considering rate cuts on December 13, despite claiming it was too early for such discussions on December 1.
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