Be afraid: The Fed Reserve confirms it’s gutless

Federal Reserve chairman Jerome Powell. Picture Graeme Jennings

The only actual policy decision the Fed made at its first meeting back for the year was to print yet another $US30bn of money through February.

So for all the talk of the Fed ‘turning hawkish’ in the face of high single-digit US inflation that it could no longer ‘not see’, it’s actually continuing in near-hyper pump-priming mode for at least another month.

It’s not only still printing money, it’s kept its official interest rate at zero (technically, 0-0.25 per cent), saying only that it expects it will “soon” be appropriate to raise it.

In his press conference, Fed chairman Jerome Powell made it explicit that “soon” was the next meeting.

“I would say that the committee is of a mind to raise the Federal Funds rate at the March meeting,” Powell said.

Let me point out that is all of a month-and-a-half away. Unlike our Reserve Bank which meets monthly – next Tuesday, and then again on March 3 - the Fed won’t meet again and (possibly/probably) hike until March 16.

Gee, talk about hastening slowly; the Fed would not only be outdistanced but twice-lapped by a sluggish clapped-out snail.

The Fed is quite simply a disgrace.

It’s hard to know which is the more pathetic – that pitiable spineless individual who’s its purported ‘leader’ or the nine vegetables sitting around the board table nodding compliantly like funfair dummies.

US Federal Reserve chairman Jerome H. Powell. Picture: Graeme Jennings

Talk about so unknowingly announcing your own ineptitude, I doubt that I’ve seen a more revealing admission than the key sentence in the Fed statement.

“With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.”

Inflation well above 2 per cent, and yet it would only be “appropriate” to raise, from zero let me remind you, “soon”? Not now, immediately; far less two, or indeed six months ago?

Inflation in the US has actually been over 5 per cent – the Fed is supposed to keep it no higher than 2 per cent - since the middle of last year and is now at 7 percent.

So this was like noting that Hitler had marched into Poland – or Putin into Ukraine – and that so “soon” it might be “appropriate” to start spending a few more dollars on defence.

The Fed has spent that last year variously ‘not seeing’ inflation in the US or dismissing it as ‘transitory’.

Now at least it “sees” the inflation, but is desperately trying to go softly-softly in fear of Wall St throwing a tantrum – when it should be precisely targeting a huge drop in the share market and significant rises in interest rates across the yield curve.

This is because asset values – the most obvious ones of shares and property, but also bonds, both government and corporate – are grotesquely over-inflated and all down to those zero rates and trillions of dollars of Fed-printed money.

I’ve loosely suggested the Dow needs to go back below 20,000 as an indicator of what’s needed to get back to economic and financial sanity, with our index going back (at least) below 5000.

That’s why I’m not particularly impressed by the claims of Wall St “adjusting” to Powell’s – fake and spinelessly pathetic – supposed “hawkishness”.

The Dow has come back all of 9 per cent from its early-January ludicrous record high, but it’s still around 34,000; although tech stocks have taken a (very slightly) bigger hit, with the Nasdaq off 15 per cent.

The Fed should have ‘surprised’ the greediest people on the planet by – so very belatedly - hiking 0.5 per cent. It really should have been 1 per cent but I would have taken 0.5 per cent.

Next stop Tuesday and our RBA.