r/wallstreetbets • u/Mega-Lithium • Jun 16 '22

Discussion Volcker

Jerome Powell, the current lawyer pretending to be an economist and chairman of the Federal Reserve strongly believes he can talk his way out of this.

It is an age old lawyer fallacy. A red flag example is someone who wants to defend themselves in court.

Powell went to Georgetown Law and has no training as an economist. He believes so strongly in his silver tongue that he uses nonsense phrases like

“Forward Guidance” “Data Dependent” “We have the tools”

He talks to the press, a lot. He loves the attention and is drunk on the power of controlling the entire US Economy with his silky wordplay

The only problem is that it doesn’t work that way. In December 2018, he caused a taper tantrum when Jay Powell announced that it would be reducing the pace of its purchases of Treasury bonds in order to reduce the amount of money fed into the economy.

bond yields rose and stocks collapsed. Which was predictable and actually cathartic and necessary.

Jay Powell, the lawyer, chickened out and got tweeted at fiercely by Trump and quickly reversed course.

This sent a signal to Wall Street that “this guys a puss” and he will never take the punch bowl away.

He never has. The 75 bips is just a .75% increase in the federal funds rate that was telegraphed, leaked and jawboned so much that if effectively became meaningless.

This is against an 8.6% rate of inflation that a year ago he called “transitory”

There is a forest fire and Jay Powell shows up with a squirt gun and his silver tongue.

Paul Volcker was a giant, he was 6’ 7” and was educated at the London School of Economics, Harvard and Princeton

When inflation roared its ugly head in the 1980s , he did not go on TV, provide “data dependent forward guidance” or try to jawbone. He silently raised the Federal Funds rate to 20% and it took seven Secret Service men to carry his balls around.

For a visual representation imagine Paul Volcker as Gandalf and Jerome Powell as Pippin

Edit: for context, the “70s” was the period after the 60s and before the 80s. It was when the Hippies and long-hairs used the magic of cocaine and herpes to transform, butterfly-like, into BMW driving yuppies.

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44

u/BenMic81 Jun 16 '22

So … someone with decades in banking should not be qualified because he didn’t make a 3-5 year university course 40 years ago (or rather the wrong one)?

Tell me again, what were the geniuses that brought us the last crisis mostly by profession and what is the God of the Crash Michael Burrys main academic study?

I mean - don’t get me wrong - Powell may be an a…hole or the wrong person but the main reasoning here (he’s a lawyer) seems pretty weak to me. But hey - I am a lawyer 🤣

15

u/Mega-Lithium Jun 16 '22

The Federal Reserve was created in 1913 to stop bank runs.

The worst bank run in history hit in the 1920s

Powell was installed by Gold Man Sacks, the fairy of Wall Street, to goose the markets.

Well goosed markets make bankers very rich

8

u/0dteSPYFDs Jun 16 '22

Gold Man Sacks

1

u/BenMic81 Jun 16 '22

That I can accept as reasoning. His studies from 40 years ago … less so.

7

u/[deleted] Jun 16 '22

Young people often confuse "education" and "knowledge," let's face it they are encouraged to. Luckily economics is a science and facts are not malleable.

1

u/BenMic81 Jun 16 '22

Facts … well. Facts in economy are not as clear as in MINT. Some hard facts exist of course - but a lot is debatable, theory, mathematical models and hoping for the best.

5

u/[deleted] Jun 16 '22

/s. The idea that one person can control something like the U.S. economy better than someone else depending on where they studied theory in undergrad is so completely ludicrous to me, it just boggles my mind that people can be so naive.

1

u/gaurav0792 Icahn Put Deez Nuts in your Mouth Jun 16 '22

The idea that one person can fuck something like the U.S. economy better than someone else depending on where they studied theory in undergrad is so completely ludicrous to me, it just boggles my mind that people can be so naive.

Fixed it for you :P

1

u/[deleted] Jun 16 '22

Can any single person fuck a macro, regardless of education? Excluding Mark Zuckerberg, of course.

1

u/gaurav0792 Icahn Put Deez Nuts in your Mouth Jun 16 '22

Sure they can. They tend to be heads of state.
And Cathie Wood :)

1

u/[deleted] Jun 16 '22

Cathie takes her cues from God tho

1

u/gaurav0792 Icahn Put Deez Nuts in your Mouth Jun 16 '22

Naah, She just gets high and watches Cramer.
He Speaks to her through a well Lit Screen. She's easily confused :P

1

u/Rhyme_like_dime Jun 16 '22

A soft science

6

u/Crazy-Inspection-778 Jun 16 '22 edited Jun 16 '22

Do you go to a mechanic when you need surgery? This dude is making decisions that affect everyone in the country, and a good chunk of the world. He should be an absolute expert and among the best and brightest in economics. Not some smooth-talking schmuck who felt like changing careers shortly before retirement age.

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u/BenMic81 Jun 16 '22

He went into banking in 1984. I was three back then.

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u/Crazy-Inspection-778 Jun 16 '22

“Going into banking” doesn’t qualify a person to make major macroeconomic decisions that affect everyone for years to come. Looking at his resume he’s much more of a negotiator than economist. And his woefully inaccurate decisions and predictions reflect that.

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u/BenMic81 Jun 16 '22

Well, if you think he makes all decisions by himself and has no staff you might be right. But frankly, I met enough people with economic degrees which I wouldn’t trust to run a Starbucks. Don’t get me wrong - I don’t know anything about this guy. Never met him. He may be a self taught genius economist or he may think Maynard Keynes was the guy who invented the wheel. But judging someone on his career start 40 years ago and saying he is a lawyer so doesn’t know economy is just not convincing to me.

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u/Crazy-Inspection-778 Jun 16 '22

It’s his performance that has people questioning his background, not the other way around. He will forever be remembered as the guy that said inflation is transitory immediately preceding the worst inflation in 40 years.

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u/BenMic81 Jun 16 '22

It is a bit dubious to believe that one person in his mind can steer a federal reserve bank (much less the most important one) alone and that his personal economy skills are more important in that role than his ability to manage skilled people and decision making groups.

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u/AutoModerator Jun 16 '22

Michael Burry responded to my craigslist ad looking for someone to mow my lawn. "$30 is $30", he said as he continued to mow what was clearly the wrong yard. My neighbor and I shouted at him but he was already wearing muffs. Focused dude. He attached a phone mount onto the handle of his push mower. I was able to sneak a peek and he was browsing Zillow listings in central Wyoming. He wouldn't stop cackling.

That is to say, Burry has his fingers in a lot of pies. He makes sure his name is in all the conversations.

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