Episode Details

Jerome Powell’s tenure as the Chairman of the Federal Reserve is coming to an end after 8 years. What has he left us? To say he has left us a mess would be an understatement. The Fed has lost approximately $240B in the last three years. The Fed has unrealized losses in their bond portfolio around $1T. Inflation remains well above the Fed 2% target. Powell has NEVER brought inflation below 2% in his 8-year tenure. The Fed balance sheet is back up to $6.7T, over 2T higher then when he started as Chairman. Powell drained all the liquidity out of the REPO market by bringing down the Fed’s balance sheet. He has since started QE light pumping money back into the market via purchases of bonds and treasuries. Powell has made one misstep after another. He caused a blowup in the REPO market in 2019, he overstimulated the market during covid causing massive inflation, which he deemed as “transitory,” he over tightened interest rates blowing a massive hole in bank balance sheets and leading to a banking crisis in 2023. Now he seeks to be a “shadow chair,” causing additional problems before his final exit. This episode reviewed an article from The Wall Street Journal (subscription required) titled “How eight tumultuous years pushed Jerome Powell and the Fed to the limit.”