Global Glass Onion February 7, 2025
Partial of a much long commentary. Interesting take by what the Fed is doing. by “Global Glass Onion” who I have known for many years. We have lost contact mostly due to me. Hope he does not mind my pirating a partial on the Fed. Good read.
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Reality is only those delusions that we have in common . . .
Saturday, February 7, 2026
global glass onion: week ending Feb 7
Report for February 7
Fed’s Cook calls recent inflation numbers ‘disappointing’ –Federal Reserve Gov. Lisa Cook said Wednesday that bringing inflation down to the Fed’s 2% target remains her top priority, calling current inflation levels “disappointing.”
- Key Insight: Federal Reserve Gov. Lisa Cook said that, after years of above-target inflation, the central bank can’t afford to appear complacent on price stability lest that complacency turn into market expectations.
- Expert Quote: “After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target.” — Fed Gov. Lisa Cook.
- Forward Look: The Trump administration has pushed for the central bank to cut rates to spur consumer borrowing and spending. The personnel of the Fed Board of Governors will largely determine whether the central bank emphasizes maximum employment or stable prices going forward.
Federal Reserve Gov. Lisa Cook said in a speech Wednesday night that the central bank’s credibility depends on its ability to bring inflation back to its 2% target.
Fed’s Jefferson wary of inflationary pressure from AI -Federal Reserve Vice Chair Philip Jefferson said Friday that, while the central bank’s near-term monetary policy choices will be based on incoming data, forthcoming productivity gains brought on by artificial intelligence could compel the Fed to maintain higher interest rates in the future.
- Key takeaway: Federal Reserve Vice Chair Philip Jefferson highlighted the potential for artificial intelligence to boost worker productivity, which could raise the neutral interest rate above what it might otherwise have been, suggesting that the central bank may have to keep rates higher going forward.
- Expert quote: “All other things being equal, persistent increases in productivity growth are likely to result in an increase in the neutral rate, at least temporarily.” — Federal Reserve Vice Chair Philip Jefferson.
- Forward look: Jefferson’s comments come as the White House has been pressuring the central bank to lower interest rates, and joins other members of the board in raising concerns about inflation in recent days.
Federal Reserve Vice Chair Philip Jefferson said in a speech Friday that long-term productivity gains brought on by artificial intelligence could compel the central bank to maintain higher rates to keep prices stable.
I will see if the Global Onion does not mind my snaring a few of his articles each month. Higher rates to keep prices stable? I see that hitting us.
While I agree with Cook’s good intentions, I am skeptical about the Fed’s ability to effect any change in the course of inflation, short of an excruciating Volcker maneuver and dramatic rise in rates. After all, the Fed spent most of the decade of the 2010s trying to get inflation UP to 2%. And they’ve spent several years now failing to get inflation DOWN to 2%.
If the Fed were really serious about dealing with inflation, they should take advantage of their remaining economic creds to create a bully pulpit that calls out the root causes of the problem. In the 2010s it was need for fiscal stimulus, a policy recommendation that Fed officials were loath to utter. Now they refuse to call out corporate price gouging, clearly evidenced by rising profit margins.
As far as I am concerned the Fed is worthless when it comes to influencing inflation, except in the most dire circumstances. And yet they refuse to take advantage of their impressive stable of economists to make policy recommendations that actually could fight inflation.
John:
Good comment. So, we should let Trump decide?
I think Trump already decided. His tax cuts were designed to get into Americans’ pocket 6 months before the midterms, assuring economic stimulus and generating the “eternal gratitude” of the electorate. However, it may well be that the actual tax refunds will be fairly paltry for most Americans and–worse–help keep inflation uncomfortably high instead of addressing affordability. The affluent will continue their spending binge, unaffected by tax refunds, and exacerbating inflation.
Furthermore, I think Trump thought that inflation from tariffs would be a moot concern–a one and done rise in the price level that would be forgotten by now. I count this is probably wrong.
Finally, he did everything he could to reduce gas prices, the most glaring red flag of price inflation for many. He thought he could get a quick victory in Iran, and that any increase in gas prices would be very temporary and inflationary effects inconsequential. The longer the Strait of Hormuz remains closed, the more anger with Trump’s economy will intensify.
IOW Trump really screwed up. Voters will have their say come November–throw the bums out.