With the Federal Reserve now committed to making monetary policy decisions on the fly, this year’s in Jackson’s Hole may matter more than ever, writes Jeanna Smialek of the New York Times. Located 34 miles off from Jackson, Wyoming, the bucolic hotel has become the site of the world’s most exclusive economic get-together. Every year since he’s stepped up as Chairman of the Federal Reserve, Jerome Powell has directed the flows of the U.S. economy from this location.
The economy has been growing faster than expected, and the Fed is determined to get inflation down to its longstanding target of 2%. However, unlike just a few months ago when it was clear that the Federal Reserve would continue to raise interest rates to slow economic expansion, the central bank is now watching and waiting and adjusting based upon ebbs and flows that are essentially impossible to predict.
This is one of the most interesting times to be alive for anyone with an interest in economics, as the world’s most important banker has never been in such a deferential position to fate. Raising rates increases the cost of living across the country and world, and Powell’s team determines whether, in aggregate, the American male will buy that new recreational vehicle, or hold off for another year.
A rate cut – which would make money cheaper, and more likely to flow into assets at the far end of the risk curve – is not happening anytime soon. This is not a rational system, despite all the data, though it was never designed to be. The choice between crypto and fiat is not total, and the lesson from Powell in Jackson Hole over the years is that there is no ideal economy, just the one you have.