At the heart of a capitalist society is a deeply anti-capitalist institution called FED, but you know what, right now it is doing a pretty good job.
At the height of the global pandemic, when markets were in a freefall, the FED pushed the button on the easiest monetary policy ever. This put a firm floor under the markets and the global economy. It also gave birth to meme trading and a generation of traders, who only know the markets going up, never down.
The whole phenomenon, it may seem in retrospect, was like a very short-term housing wealth effect, making people feel wealth(-ier), happy to spend more and worry less about their jobs, only with stocks, which in hindsight the FED could always make go down back to earth.
The careful signaling of Jeremy Powell, the distant possibility of a few bps rate hike, which would make the debt earn more, which would make the investors redistribute their capital to debt, which would make the all-promise no-profit stock darlings of 2020/2021 go down, is perhaps the best way to tame the inflation. It takes the easy riches back, which puts brakes on spending and tames inflation in the most natural way possible.
You could say that there is very little that the FED can do other than talking and/or more monetary easing. It has inherited a global monetary system that is addicted to…
