You want to explain to the inflationistas, the people who think the only answer to our problems of higher inflation is to slam the brakes on the economy with rate hikes? Here's what you do. You have Jay Powell roll into the virtual meeting with an 18 wheeler. At least then these thumb suckers could see something that's the real problem: a shortage in drivers. We simply don't have enough of them and either we have to train more or they have to start offering more money to cure shortages that bring about hoarding and ever higher prices.
But let me ask you. Look me in the eye and tell me that a rate hike creates truck drivers. If it does I will take four of them.
Let's figure out what else a rate hike doesn't cure. We are all aware that lumber is way up in price. Sure it's come down but it's still preposterously high.
You want to fix that? It's pretty simple: President Biden picks up the phone and tells Justin Trudeau, the prime minister of Canada, that it's time to take the tariffs off wood. Why not? They own many of the mills in this country already and it isn't like they are expanding fast enough to hire a lot of people. You get the price of a two by four down you get inflation down.
How many rate hikes should Powell give us in order for the president to take down the tariff. Two, three, five? Talk about transitory, how about none.
We got a freak storm in Texas and Louisiana this winter that took out a huge part of our plastic plants. It was so swift that no one was ready for it. That meant the damage was far more severe than people realize. It's taking even longer for them to get these plants on line than anyone thought. If you think rate hikes would make the re-build go more quickly than lets have a dozen of them. But I think that the plants would not benefit from Powell pitching in like that. Better if he had a blowtorch and pliers.
Jim Farley, CEO of Ford (F) , gave you a terrific pre-announcement today. Estimates are too low. But the fact is that supply is too low, too. That means, again, higher prices, especially higher used car prices because of a dearth of new cars. That's unacceptable.
But it's what has happened because we outsourced all of our semiconductor making to the Far East and our semiconductor companies have chosen to focus on making hyperscale computing chips or semis for cell phones. It's not a chip shortage so much as it is a choice by the best semi companies to concentrate on other areas. If some big chip companies would choose to focus on feature rich semis instead of cellphone or data center chips then the shortage would end.
If seven rate hikes would get the semiconductor companies to switch focus then we have something. Maybe eight hikes? How many do the plutocrats want? Ten hikes? I don't know. But I bet if you talk to the heads of the major semi companies and told them about all of the juicy rate hikes the oligarchs want to get things moving I bet they would say, you are looking at the wrong people to get that job done.
I could go on and on about the real inflation in the system and what needs to get done, but I think you get the picture. An 18 wheeler with Powell at the helm would stand for one thing: not the need for hikes but the need for drivers. It's just that the jackals who hound Powell haven't figure out that's what's causing inflation, not Powell himself.