On Monday, December 13, Americans will debate the Federal Reserve following Friday's U.S. Consumer Price Index report released by the Bureau of Labor Statistics. Thousands of Federal Reserve-related tweets have been trending on Twitter as inflation has gripped the U.S. economy. Mohamed El-Erian, chief economic adviser at German multinational financial services firm Allianz, said in a recent interview that the term "temporary" was the "worst inflation call in history." Allianz's chief economic adviser says US Federal Reserve calling inflation 'transitory' was a bad decision At the end of April 2021, members of the Federal Open Market Committee (FOMC) told the American public that the...
On Monday, December 13, Americans will debate the Federal Reserve following Friday's U.S. Consumer Price Index report released by the Bureau of Labor Statistics. Thousands of Federal Reserve-related tweets have been trending on Twitter as inflation has gripped the U.S. economy. Mohamed El-Erian, chief economic adviser at German multinational financial services firm Allianz, said in a recent interview that the term "temporary" was the "worst inflation call in history."
At the end of April 2021, members of the Federal Open Market Committee (FOMC), said to the American public that the Federal Reserve would keep the benchmark interest rate near zero and monthly bond purchases would continue. The statements of FOMC and Fed Chairman Jerome Powell emphasized that inflation would only have a “temporary impact” on the American economy. Fed members not only said inflation would be temporary, but it was routinely parroted by the media, US politicians and America's banking giants as well as.
If the US really paid off its debt, the Federal Reserve wouldn't monetize it.
— Axiomatic Enemy of the State (@DeTocqueville14) December 13, 2021
Just before the Bureau of Labor Statistics' November Consumer Price Index (CPI) report was released, the "temporary" speakers began supporting claims that inflation was temporary. The latest CPI report specified that the metric has reached its highest level ever in almost forty years, rising to 6.8% over the same period in 2020. The cost of goods and services in America continues to rise month after month, and many more Americans are beginning to point their finger at the Federal Reserve.
For example, the name is “Federal Reserve.” quite trendy on Twitter and can be seen in thousands of tweets in the US. On Sunday afternoon, the chief economic advisor of the German multinational financial services company Allianz criticizes the Fed on CBS' "Face the Nation." Mohamed El-Erian says the description was “temporarily” one of the worst calls in the history of the Federal Reserve.
“Characterizing inflation as temporary is probably the worst inflation call in the history of the Federal Reserve and is very likely to result in a policy error,” El-Erian stressed during his interview. “So the Fed needs to quickly regain control of the inflation narrative and regain its own credibility starting this week,” said the Allianz chief economic adviser. El-Erian further added:
Otherwise it becomes a driver of higher inflation expectations that feed on themselves.
Sven Henrich, the analyst behind it northmantrader.com, condemned US President Joe Biden's recent tweet when the president said he would raise the debt limit. “The United States is paying off its debts by taking on more debt,” Henrich tweeted. "[And] If it can't find enough buyers for its debt, it will have the Federal Reserve buy its debt, currently over $5.6 trillion. [And] If interest rates fell back to 2007 levels, the U.S. would be bankrupt."
Next year they will tell you that inflation has peaked because price increases have stabilized and you feel better about shopping. pic.twitter.com/P4LlMeNHxn
— Sven Henrich (@NorthmanTrader) December 12, 2021
The popular financial author Carol Roth The Fed's monetary policy decisions were also roasted on Twitter. “If you go into your bank account, increase your balance digitally, and then buy things with that new balance, that would be considered fraud,” Roth said said. “When the Federal Reserve does that, it’s called monetary policy,” she added. During his CBS interview, El-Erian claimed there was a chance the Federal Reserve could take the reins and control the economy. “If they catch up now, if they are honest about their mistake and take steps now, they can still fix it,” El-Erian noted.
So far, the Federal Reserve has talked about interest rate changes and withdrawing quantitative easing, but so far it has not acted on any of its discussions. However, El-Erian said the Federal Reserve should “take its foot off the gas” instead of tapering extremely quickly. The economist further said that the rich are more likely to be affected by inflation, as have a number of media experts have publicly claimed, El-Erian insists that low-income households are suffering more from rising inflation.
“There is a possibility that they will have to raise interest rates,” concluded El-Erian. "Look, it's important to stop inflation [from] becoming embedded in the system because two things happen when inflation becomes embedded. One, you lose purchasing power and the poor suffer the most. Two, you get an overreaction from the Fed and then a recession and then a loss of income. So you really want to manage that process in a timely and orderly way."
What do you think of the recent criticism of the Federal Reserve and Mohamed El-Erian's comments about the Fed's "transitory" description of inflation? Let us know your thoughts on this topic in the comments below.
Photo credits: Shutterstock, Pixabay, Wiki Commons
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