Powell Admits He Was Wrong About Tariffs and Inflation

POSTED BY: 6ixStringJack
UPDATED: Thursday, August 28, 2025 03:05
VIEWED: 242
PAGE 1 of 1

6IXSTRINGJACK

Thursday, August 28, 2025 3:05 AM

Another so-called "expert" that doesn't know what the fuck he's doing is what it is.

https://www.foxnews.com/opinion/what-fed-must-do-now-after-jerome-powe
lls-jackson-hole-epiphany

Quote:

---

Last Friday in Jackson Hole, Federal Reserve Chairman Jay Powell finally – and grudgingly – admitted what the Trump team has been saying all along: tariffs don’t fuel inflation.

At most, tariffs create a one-time adjustment in prices, not the kind of runaway spiral that demands punishing rate hikes. And even that one-time bump may be negligible if, as we have long argued, foreign exporters – not American consumers – shoulder most or all of the burden.

The implication is clear: whether the impact is zero or merely a one-time step-up in prices, there is absolutely no justification for the Fed to hide behind "tariff uncertainty" as an excuse for overly restrictive interest-rate policy.

This really is a historic epiphany from a Fed chair who has long misunderstood the power of Trumpnomics – the four beautiful horsemen of economic growth and price stability: tax cuts, deregulation, strategic energy dominance and fair trade.

Trumpnomics delivered both strong economic growth and price stability in the first term. It is delivering again in the second.

Markets immediately recognized the punch of Powell’s tariff epiphany. The Dow smashed through its 45,000 ceiling – and I remain on record predicting a march to 50,000. Yields on the 10- and 30-year Treasuries tumbled, driving bond prices sharply higher.

Clearly, Wall Street got Powell’s dovish tariff message: the door to a September rate cut is now wide open. The only suspense is whether Powell will nibble with 25 basis points – or cut far more boldly.

But here’s the lingering fear, from the West Wing to Wall Street: While Powell may now grasp that tariffs don’t fuel persistent inflation, he still doesn’t understand who pays.

Memo to Jay: Every one of America’s major trading partners – the same countries driving our $1 trillion annual trade deficit – is deeply dependent on access to the U.S. market. When Trump slaps on tariffs, it is their exporters, not our consumers, who shoulder the burden. Without U.S. demand, their economies falter – so pay the tariff piper our trading partners must.

That’s why in Trump’s first term, despite all the handwringing from the "Panicans" about looming inflation, tariffs on everything from steel and aluminum to China produced the opposite: robust growth with price stability.

If Powell clings to timidity and keeps rates overly restrictive, he will continue inflicting enormous harm on the U.S. economy. American families are already being crushed by the world’s highest mortgage rates, small businesses can’t get affordable credit, and exporters face a dollar so overvalued it prices them out of global markets.

Global rate spreads underscore just how out of touch the Fed is with the rest of the world. The European Central Bank’s deposit facility sits at 2%. The Bank of Japan holds near 0.5%. China runs its seven-day repo at 1.4%. Against that backdrop, the Fed’s 4.25%–4.50% target range remains a glaring outlier – more than 200 basis points above Europe, nearly 400 above Japan, and triple China.

The result: the U.S. economy combines the world’s highest policy rates and mortgage rates with the world’s strongest currency – a triple hit to American exporters.

Financing disadvantage: American manufacturers pay more to borrow, making new plants and equipment costlier.

Currency distortion: Elevated Fed rates keep the dollar over-priced, inflating the price of U.S. exports while giving foreign competitors a pricing edge.

Market share erosion: Foreign rivals win contracts not because they innovate, but because they borrow cheaply and undercut U.S. prices.

On the home front, the Powell squeeze is just as punishing. Average 30-year fixed mortgage rates remain stuck in the 6–7% range, double pre-pandemic levels. That locks millions of young families out of the housin

NOTIFY: Y  | REPLY  | REPLY WITH QUOTE  | PERMALINK  | TOP  | HOME