Thank you for a fair and balanced discussion of Powell's brilliant career and his refusal to bow to political pressure. Macroeconomics is certainly an arcane subject, and those of us who are not professionals in the field appreciate your down-to-earth explanations.
I have an amusing footnote. In my first economics class, in 1967, the professor said that by the time we got out in the working world, many of the things we learned in his class would be proven wrong. This freaked out the science and engineering students in the class. Then in the mid-70s the Philips Curve was proven to be wrong when we had both inflation and high unemployment at the same time: stagflation.
Powell was villified but he rode the bucking bronco for nearly two decades with solid data-driven efforts and he will be missed when he rides off into the sunset next May.
Marc Antony: "I come not to praise Caesar, but to bury him."
JB: "I come not to bury Powell, but to praise him."
As we all should. Imagine having such an important job as Powell has and to have to deal with both the huge responsibility of doing the job well, but to also have to listen to the verbal diarrhea of a complete idiot criticizing you for not ignoring the job and responsibilities and simply bowing down to the Idiot King. If the job weren't difficult enough, Powell also has to contend with caring about the most vulnerable Americans, while dealing with an economy and government that are set up for more well-to-do Americans. Republicans have favored the wealthy, while despising the poor. Democrats have always focused much more on the middle class.
Washington State where I live, despite its being a solidly blue state, has the most regressive tax system of all 50 states. The ignorance and mistrust of the voters is such that when Governor Jay Inslee championed a special tax on wealthier Washington residents, the voters defeated the measure by 2-1. Why would they do that? Despite the legislation being written to guarantee that those taxes could not be extended to lower incomes (than $250,000 for individuals and $500,000 for couples) without an explicit vote of the electorate, voters, miraculously, seemed to think that it was just a matter of time before the rates applied to lower incomes and them. Those rates couldn't be applied to lower incomes unless the voters approved it, but that didn't matter. I suppose there could always have been the problem of the eternal fantasy: I'm not rich today, but I will be or could be and don't want those rates to apply to me. Of course, that is as delusional for the vast majority of people, but delusions, such as Trump will lower inflation, drive a lot of voting behavior in this country. (Note: A similar tax was proposed by a very right wing governor in Alabama, and it failed there by roughly the same 2-1. Washington State has a high school graduation rate about 5% higher, a college graduation rate about 5% higher, and an advanced degree rate about 10% higher than Alabama, so WA residents being more educated didn't help. Those statistics are for 2025, but they were probably similar when the taxes were on the respective state ballots.) It seems that being educated is not the same thing as being informed or rational. If I remember correctly, in both states lower income people voted against the taxes at higher rates than the rich.
Of course, Trump, who is "surprised" that Powell was appointed Fed Chair, despite the fact that he, Trump, is the president who appointed Powell, must be getting his news from the wide screen television he has installed deep in his colon. Not a pretty image.
Needless to say, Trump has never given anyone any reason to think he is even minimally intelligent or in any way well-informed, yet 77 million voters, who must be as cognitively-challenged as Trump himself is, chose him to demonstrate his limitless ineptitude, infinite depravity, and eternal need for vengeance for four years. We can only hope that he doesn't survive those four years, but that would mean JD Vance, president. We aren't simply caught between a rock and a hard place, we're stuck between Ebola and Marburg and the only question is which one will infect us first.
I'm a fan. Those who pile on that Powell was too late to raise rates, forget that we were still in the throes of a global pandemic. Job #1 was to ensure that the economy didn't crater. So in hindsight he was a few months late raising rates. But that's infinitely better than crashing the economy. Powell (and Yellen before him) deserve our thanks and respect.
Well said, and I couldn’t agree more. It’s difficult for me, an economics PhD to acknowledge that Powell, whose academic training was in law, has been an exemplary Chair of the BOG, but that is true, and exactly for the reasons you mentioned - courage, caring, communication skills, and an intelligent, collegial, and data-driven approach to decision making. I’m really concerned about the future of the Fed.
Economists are skilled at explaining the past, not so much at predicting the future, however, with the increasing use of AI tools, who knows, the one "unknowable" is TACO. With a charging Bull market, investors appear to have plenty of bucks, the Powell speech is a sideshow, unless .... Trump, who almost daily lauds our economy and our future, if Bears begin to nibble, who knows. A Dow Dip can become a dive and a tsunami .... my favorite Chinese restaurant is thriving, what else could one want...
I haven't thought about ngdp targeting that for awhile. It doesn't get the Fed out of the same woods they're in right now, trying to navigate through highly misguided Trumpian policy. But I do recall that nom GDP was signaling overheating back in '21 (12% growth, q4/q4). I think there's a coherent case the ngpp level targeting could have provided a helpful guidepost back then. But, of course, that was an unusual moment!
Thank you for giving Jay Powell the recognition he deserves. He is indeed, an honorable, forthright man, and man who leads with integrity. Our country desperately needs more Jay Powells.
Trump seems overmatched by the magnitude of the task of opining on the way forward on Fed policies and he doesn't seem to have the good sense of rolling back his worst ideas.
Trump commends brutality in Russia and China in the form of imprisonment of religious minorities and political dissidents in places where they can be tortured and killed. He sees a resort in Gaza after genocide and ethnic cleansing. Like the betrayal and murder of Seminole leaders when they accepted an offer to parlay with the US military, Trump seeks to appear even handed in excluding Ukraine from NATO while he makes open ended and empty threats to sanction Russia which he repeatedly extends even as they bomb civilian areas. Now he claims emergency powers in nineteen states for the crime of dissent. Fascism could land here more quickly than we thought. Dust off the disqualification of insurrection brought forward by Blue State governors.
I'd say the Fed's big mistake was not raising rates to suppress the pandemic real estate bubble. Fiscal stimulus, unlike in 2009, was quite adequate, continued monetary stimulus actually damaging.
I would agree that the language used to create the FED in 1912-13
is “ arcane “ , but the policy levers
used and the implications of monetary policy on the overall health of our economy are more important now than ever before.
I’m not sure how sensitive business investment is to short term interest rates falling - Wall Street seems to
reach orgasmic heights at the mere mention of softening. Sound policy will at least attempt to figure it all out .
One thing we can easily say about fiscal policy ( at least in the Trumpian near term ) is that we better have sane monetary policy independent of political pressure if we want to avoid that iceberg dead ahead .
Thank you for a fair and balanced discussion of Powell's brilliant career and his refusal to bow to political pressure. Macroeconomics is certainly an arcane subject, and those of us who are not professionals in the field appreciate your down-to-earth explanations.
I have an amusing footnote. In my first economics class, in 1967, the professor said that by the time we got out in the working world, many of the things we learned in his class would be proven wrong. This freaked out the science and engineering students in the class. Then in the mid-70s the Philips Curve was proven to be wrong when we had both inflation and high unemployment at the same time: stagflation.
Thank you once again. Incredibly timely, thoughtful perspective.
Next time we have a sane president, he should give Powell the Presidential Medal of Freedom, the size of a dinner plate.
"No one protected the independence of the institution with such relentless vigor" - somewhat similar to Anthony Fauci.
Powell was villified but he rode the bucking bronco for nearly two decades with solid data-driven efforts and he will be missed when he rides off into the sunset next May.
Marc Antony: "I come not to praise Caesar, but to bury him."
JB: "I come not to bury Powell, but to praise him."
As we all should. Imagine having such an important job as Powell has and to have to deal with both the huge responsibility of doing the job well, but to also have to listen to the verbal diarrhea of a complete idiot criticizing you for not ignoring the job and responsibilities and simply bowing down to the Idiot King. If the job weren't difficult enough, Powell also has to contend with caring about the most vulnerable Americans, while dealing with an economy and government that are set up for more well-to-do Americans. Republicans have favored the wealthy, while despising the poor. Democrats have always focused much more on the middle class.
Washington State where I live, despite its being a solidly blue state, has the most regressive tax system of all 50 states. The ignorance and mistrust of the voters is such that when Governor Jay Inslee championed a special tax on wealthier Washington residents, the voters defeated the measure by 2-1. Why would they do that? Despite the legislation being written to guarantee that those taxes could not be extended to lower incomes (than $250,000 for individuals and $500,000 for couples) without an explicit vote of the electorate, voters, miraculously, seemed to think that it was just a matter of time before the rates applied to lower incomes and them. Those rates couldn't be applied to lower incomes unless the voters approved it, but that didn't matter. I suppose there could always have been the problem of the eternal fantasy: I'm not rich today, but I will be or could be and don't want those rates to apply to me. Of course, that is as delusional for the vast majority of people, but delusions, such as Trump will lower inflation, drive a lot of voting behavior in this country. (Note: A similar tax was proposed by a very right wing governor in Alabama, and it failed there by roughly the same 2-1. Washington State has a high school graduation rate about 5% higher, a college graduation rate about 5% higher, and an advanced degree rate about 10% higher than Alabama, so WA residents being more educated didn't help. Those statistics are for 2025, but they were probably similar when the taxes were on the respective state ballots.) It seems that being educated is not the same thing as being informed or rational. If I remember correctly, in both states lower income people voted against the taxes at higher rates than the rich.
Of course, Trump, who is "surprised" that Powell was appointed Fed Chair, despite the fact that he, Trump, is the president who appointed Powell, must be getting his news from the wide screen television he has installed deep in his colon. Not a pretty image.
Needless to say, Trump has never given anyone any reason to think he is even minimally intelligent or in any way well-informed, yet 77 million voters, who must be as cognitively-challenged as Trump himself is, chose him to demonstrate his limitless ineptitude, infinite depravity, and eternal need for vengeance for four years. We can only hope that he doesn't survive those four years, but that would mean JD Vance, president. We aren't simply caught between a rock and a hard place, we're stuck between Ebola and Marburg and the only question is which one will infect us first.
I'm a fan. Those who pile on that Powell was too late to raise rates, forget that we were still in the throes of a global pandemic. Job #1 was to ensure that the economy didn't crater. So in hindsight he was a few months late raising rates. But that's infinitely better than crashing the economy. Powell (and Yellen before him) deserve our thanks and respect.
Well said, and I couldn’t agree more. It’s difficult for me, an economics PhD to acknowledge that Powell, whose academic training was in law, has been an exemplary Chair of the BOG, but that is true, and exactly for the reasons you mentioned - courage, caring, communication skills, and an intelligent, collegial, and data-driven approach to decision making. I’m really concerned about the future of the Fed.
Economists are skilled at explaining the past, not so much at predicting the future, however, with the increasing use of AI tools, who knows, the one "unknowable" is TACO. With a charging Bull market, investors appear to have plenty of bucks, the Powell speech is a sideshow, unless .... Trump, who almost daily lauds our economy and our future, if Bears begin to nibble, who knows. A Dow Dip can become a dive and a tsunami .... my favorite Chinese restaurant is thriving, what else could one want...
A bit off topic, but what do you think about Scott Sumner's proposal for NGDP level targeting?
Otherwise, Powell is certainly to be applauded for his focus on serving the people through the Fed's dual mandate and not politicizing the Fed.
I haven't thought about ngdp targeting that for awhile. It doesn't get the Fed out of the same woods they're in right now, trying to navigate through highly misguided Trumpian policy. But I do recall that nom GDP was signaling overheating back in '21 (12% growth, q4/q4). I think there's a coherent case the ngpp level targeting could have provided a helpful guidepost back then. But, of course, that was an unusual moment!
What is NGDP?
Nominal GDP.
Thank you for giving Jay Powell the recognition he deserves. He is indeed, an honorable, forthright man, and man who leads with integrity. Our country desperately needs more Jay Powells.
Trump seems overmatched by the magnitude of the task of opining on the way forward on Fed policies and he doesn't seem to have the good sense of rolling back his worst ideas.
No Kings. No Tyrants. No Dictators.
Trump commends brutality in Russia and China in the form of imprisonment of religious minorities and political dissidents in places where they can be tortured and killed. He sees a resort in Gaza after genocide and ethnic cleansing. Like the betrayal and murder of Seminole leaders when they accepted an offer to parlay with the US military, Trump seeks to appear even handed in excluding Ukraine from NATO while he makes open ended and empty threats to sanction Russia which he repeatedly extends even as they bomb civilian areas. Now he claims emergency powers in nineteen states for the crime of dissent. Fascism could land here more quickly than we thought. Dust off the disqualification of insurrection brought forward by Blue State governors.
I'd say the Fed's big mistake was not raising rates to suppress the pandemic real estate bubble. Fiscal stimulus, unlike in 2009, was quite adequate, continued monetary stimulus actually damaging.
Yea, verily! And he does deserve the Presidential Medal of Freedom.
I would agree that the language used to create the FED in 1912-13
is “ arcane “ , but the policy levers
used and the implications of monetary policy on the overall health of our economy are more important now than ever before.
I’m not sure how sensitive business investment is to short term interest rates falling - Wall Street seems to
reach orgasmic heights at the mere mention of softening. Sound policy will at least attempt to figure it all out .
One thing we can easily say about fiscal policy ( at least in the Trumpian near term ) is that we better have sane monetary policy independent of political pressure if we want to avoid that iceberg dead ahead .