Has Powell tanked us?
Seems like we’re headed for a deep recession, as someone with less than 1 yr of exp out of school I’m so worried
Trending Content - Investment Banking Forum
Career Resources
WSO Free Modeling Series - Now Open Through
June 30, 2026
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
High Finance Applications
Guaranteed
Get at least one offer GUARANTEED
- 1:1 support
- 92% success rate
- 2,000+ mentor network
- Unlimited Live bootcamps
- AI for resume + LinkedIn
- Networking automation tools
- HireVue simulation tool
- Full course library
- Private Slack community
- 20hrs of mocks
- + much more...
His only mistake was not hiking rates sooner. When rates are ≈0% for more than a decade, people get accustomed to it. I think this was bound to happen sooner or later.
Rates should have been increased early Trump admin. Both Trump and the Fed caught shit for the artificially low rates that weren't being increased because there was no wiggle room if a crisis happened. Then covid happened.
The FED tried to increase rates in late 2020 but it was met with immediate stock market slow down and inflation wasn't high. Given the FEDs mandate for full employment and price stability, the call was to revert back to lower rates. It was only when inflation began to rise post-COVID that the FED had to reengage. The problem is that, over the long run, the FEDs mandates are internally contradictory. At some point, to fight inflation, you have to induce a severe recession (high unemployment). We saw this in 2006-2008 and we're seeing it now. Curious to see how the FED moves.
chill we’re gonna be fine
I think he's done enough to stagnate us for the next 5 years, not tank
Powell should be charged and tried in criminal proceedings. His recklessness has caused more financial destruction than all ponzi frausters out there and it was all in the fake-guise of "fighting inflation" that never existed in the first place. 3 month average of headline CPI is already below the 2% fed "target" and that doesn't even take into account the severe-lag in the shelter OER component that comprises nearly 40% of the index.
In b4 someone says " hurr durr I'm a salty bagholder" or whatever. This is reality and facts. I'll put my record up against anyone else. The consequences of this go far beyond just our portfolios.
100% agree
Your record? As an Analyst 1 in IB? Are you going to show me a screenshot of your Robinhood account from when you were in college next?
Hilarious. First off, old title. Second, do you have any data to disprove what I've said? Happy to provide data that can show the particular breakdown of the CPI basket and how nearly all categories have been in outright disinflation for 6 months. What are we tightening for exactly? What is the issue with price-stability as-is and do you understand how leads & lags to monetary policy work? We haven't seen the effect of 425bps of hikes still.
The problem was not with Powell, never has been, the underlying problem that has gotten us into this mess can be summed up in one word: Democrats
they play continuous musical chairs, bailout after bailout, spending bill after spending bill, feeding the bubble and refusing to allow the tiniest bit of suffering, until they’ve fed the bubble to the point its a massive hot air balloon that with explode into an inferno that even their spending bills, and impassioned speeches from Elizabeth Warren, will be unable to fix. Look at how they treated SVB. Instead of letting the market take its course, they couldn’t bear to watch some rich tech VCs lose a few of their millions in a failure of a bank. Instead they pumped the bubble more.
We’ll all see where this ends up. The democrats just want to keep the bubble going until the next Republican administration with a sense of fiscal responsibility and refusal to save the weaklings, so they can blame someone else.
truth hurts.
The greatest thing for our country is having a president become a sacrificial lamb of low approval. Cut frivolous spending, lower the deficit, and shore up our trade exports. It most likely will lead to low approval and a one-stinter, but it will get us back on track and end the madness.
Unfortunately, both sides will keep promising lofty budgets to win votes and get into the white house.
Eh, silicone valley has been fueled by free money for far too long. This relatively small corner of the economy won’t hurt us nearly as bad as the crisis in 2008. They’re just loud and spend their days on social media
Democrats overreacting to COVID is what killed this economy
yeah fuck the dems! can't wait for trump to save this economy in 2024 #LFG
Can anyone smarter than me opine on what caused inflation - people are citing the Covid stimulus but if you look at m2 supply growth it increased significantly during trump
Exactly. Shutting the world economy down to save a few boomers and printing a shit ton of cash to make up for it.
Totally, cause
a. the democrats were in power for most of 2020 when policy responses were set for COVID right?
b. it's like the Democrats who set Fed policy somehow, even though it's independent from the government and frankly, Trump was begging for lower rates even prior to COVID 'because Obama had lower rates'
https://www.reuters.com/article/us-usa-fed-trump/trump-heaps-pressure-o…
c. those democrats also somehow infiltrated the M2 money supply and pumped it while Republicans were in power, I mean how else did it massively expand in 2020 before they took power?
d. not only that, the Democrats mind-controlled the Republicans to getting PPP stimulus over the line, even though Trump wanted bigger checks:
https://www.reuters.com/article/us-health-coronavirus-usa-trump/trump-t…
e. and the economy coming out of COVID was doing TERRIBLE, with 5.9% GDP until the central bank signaled aggressive rates but somehow Democrats responsible for this again
Great analysis, look forward to seeing your guest lecture at U Chicago. Just so we're clear, I'm not some bleeding-heart Democrat (not even American) and will happily criticize them for stupid things they say / do, but this economy was purely a function of exogenous factors and monetary policy, not elected government.
a - e. Did the Dems not control the House in 2020?
He and yellen decided to save all banks. Money printing is on again. No more rate hike!!!! Inflation plus bull market is on again
In the Fed’s defence they are left trying to fight inflation with rate rises and open market policy while they get zero help from the democrats in the federal government who keep spending like crazy. If Congress would get it’s act together and decrease the deficit the fed may not have to go so hard.
He should have increased rates more slowly. 20 bps every quarter, and to be more transparent with these raises. I'm curious if the fed will increase rates with what's going on now.
I’d assume still full steam ahead. They came up with a solution regarding SVB and SB banks.
It goes way deeper IMO. Can be traced all the way back to i. post 2008-2009 and refusal to raise rates until we were already nearing the late cycle. Bankers thought there was no inflation but there was plenty of asset price inflation and ii. Globalization of the 90s and the cheap labor and products from China, Russia, and India coming online. Now the world is shifting with input and labor costs internationally and systematically higher inflation triggers seem likely for the foreseeable future
That said, raising rates to put the economy into recession was the idea here, even if the FED was never going to publicly admit it, whether or not that has already happened and the FED should chill seems to be the question
Nah it goes deeper than this tbh. All goes back to FD Roosevelt and the start of federal interventionism and the big state. None of this would have happened under Calvin Coolidge (S-tier and most underrated president btw)
lmao yes, but can make arguments about necessity of various policies or lack thereof though
Cooking the books since 1913..
The dark secret is that the Fed has known for decades that rising interest rates doesn't impact inflation, it doesn't impact money supply, and money supply doesn't impact inflation anyway. Alan Blinder, who used to be Vice Chair of the Fed has a relatively new book out about monetary policy where in a section talking about this he discusses a private conversation he had with Paul Volker. He confirmed that they were on the same page about how things work or don't work. Volker said, of course. So he asked why he did what he did then. Blinder said he didn't expect the response. "To cause bankruptcies." And it did. It caused the S&L crisis.
The whole premise is not discussed, the same as we don't really discuss what we mean with lots of policy actions these days. It's all euphemism and weasel words. But what they mean with Fed policy is that inflation is an average of many things, and since they can't do anything about food, energy, or healthcare, the things actually shooting up in price, they'll try to tank the market for some other things like real estate and financial investments, and the distress over there will cause everything to average out. Problem solved right?
We are living in a time where a flat screen tv covering all 4 walls will be $100 and a useless 4 year education will cost $500,000
Incidunt itaque fugit aspernatur. Esse quaerat earum excepturi aut ut ipsam inventore. Voluptates quaerat modi vitae. Maiores alias dolorum quae velit enim. Facilis sunt dolor dolorem eius voluptates.
Voluptatem praesentium atque vel consequatur nihil consequatur et. Sint aliquid reprehenderit voluptatem dolores. Blanditiis tenetur magnam odit beatae eum excepturi dolorem. Voluptatibus culpa ullam illo autem sed aliquid. A saepe ab magni eligendi.
Amet odio est tenetur. Ea dolorem qui nihil repellendus exercitationem laborum qui. Dolor qui tenetur officia amet recusandae rerum quas.
Sapiente distinctio et sint sit. Aut dolores hic et ex tempore placeat quaerat. Eos eum quo debitis quasi ut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Aut enim laudantium necessitatibus ut quibusdam rem. Est odio impedit harum quaerat. Beatae et dolorum voluptatem et atque. Sed culpa repudiandae et.
Autem possimus et tempore rerum totam tempore. Quibusdam nemo mollitia est repudiandae vero. Et accusantium velit cupiditate mollitia totam corrupti voluptatum placeat. Fugiat veniam asperiores quae eius labore magni nihil. Iste aut sit dolorem repudiandae tenetur. Sint ipsum qui eum quasi quo et. Fuga consectetur magnam non architecto nihil.