Commentary For the second time of his tenure, Federal Reserve Chairman Jerome Powell is about to embark on what I have previously described as a game of “Monetary Jenga.” The first, as you may recall, occurred immediately upon Powell taking the reins at the central bank. Ironically (given what has followed, especially in just under the last two years), he immediately began an attempt at “normalizing” monetary policy back then in early 2018 after giving both a warning and a history lesson. Powell rather eloquently told us he was embarking on a methodical, well-telegraphed course of both “quantitative tightening”—actually reducing the size of the Fed’s own balance sheet—and interest rate hikes to try to avoid the mistakes the Fed itself caused in the two prior big busts: in 2000 and 2008. It was by allowing overly lax monetary policy and the inflating of too many bubbles—“imbalances” has always been Powell’s …
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