Goldman Chairman: The politicized Fed has no will to stop inflation

Can the Federal Reserve Break the Back of Inflation? That question is one of paramount importance as inflation rises and remains high (too much for all who worry about it being “transient”). Unfortunately, it looks like the answer might be “no”.

At least, that’s Goldman Sachs’ view ‘no. 2, its president, John Waldron, who questioned the independence of the Federal Reserve and its willingness to see policies to suppress inflation when speaking to a Bloomberg reporter .

The background is this: currently, inflation is at around 7%, the highest level in forty years. The last time inflation was this bad, during the presidency of Jimmy Carter and the early years of Ronald Reagan, the head of the Federal Reserve at the time, Paul Volker, had to break the back. of inflation by raising interest rates horribly. Those policies eventually beat inflation, but they also led to a severe recession.

Now it may have to do so and based on what he told BloombergWaldron doesn’t think the Federal Reserve has the will or independence needed to take such a course.

Speaking to that outlet, he said that he thinks what has happened in the past few years in terms of monetary policy has brought “question the independence of the Fed.”

Furthermore, Bloomberg reports that he doubts that the Fed has the will and strength to act as a “The independent monetary policy apparatus is doing what it thinks is right, not what is necessary. “They have the opportunity here to do it,” he added, “But I’m a bit worried about whether they’ll get up and do it.”

Those comments are huge, as they show that Goldman doesn’t. You two are probably quite worried about what’s going on.

Like ZeroHedge Note, “the comments represent a “rare poke” by a senior banker. Usually, megabank executives bring water to the Fed by (among other things) appearing on CNBC to declare that they have complete confidence in the Fed’s ability to “flow the needle,” as JPM CEO Jamie Dimon recently said. Even Waldron’s former boss, Lloyd Blankfein, retired to appear on “Squawk Box” the day before.”

Waldron’s willingness to pounce on Jerome Powell and the Federal Reserve shows that he is quite worried about inflation. If it’s a small issue, possibly one that can be brought up, he won’t take the big, potentially risky step of publicly criticizing the independence and effectiveness of the Fed. As ZeroHedge noted, such comments are often not made, bankers don’t buy money printing hands to feed them.

But he did. He bit his hand, Powell was embarrassed and told the truth. It can therefore be assumed that he views inflation as a major threat, one that needs to be recognized and addressed, regardless of the eventual consequences.

As for what he said about the Fed’s inability to solve the problem, that’s very worrying.