Federal Reserve Chairman Speech From a (Socialist) Poker Player’s Point of View
Federal Reserve Meeting — Jackson Hole Wyoming
Watch Fed Chair Jerome Powell’s speech (click here) released on Friday August 27 2021.
My name is Mike Garcia. I am 57 years old. I am a small business owner. I spent the better part of a dozen years in the mortgage industry and I have been playing poker since I was a kid in grammar school. I’ve played more hands of poker than you’ve had hot meals by a factor of 100. I tend to look at things from a “poker player’s point of view. That is my natural state of being. In order to be a successful poker player you need to develop two important skills. First, you need to be able to do some fairly simple math in your head rather quickly. Second (and more importantly), you need to be able to get a good “read” on your opponent. That is to say you analyze the look, speech, and mannerisms of your opponent to gauge the strength of his or her hand.
So I couldn’t help but notice a few things as I watched the Federal Reserve Chairman (Jerome Powell) deliver his speech today. The Focus of the speech was on : “price stability and employment”. What I was looking for was what the Federal Reserve had planed (in terms of policy and interest rates), to deal with the resent spike of “inflation”. Something struck me about six minutes into a twenty minute speech— I noticed something when Chairman Powell said “A sharp run up in inflation” As a poker player I immediately thought the Chairman has the look (we call these “tells”), of a weak player who is bluffing. And I thought - Let’s see if we can spot more of these “tells”. This made the speech much more interesting for me.
The spike in inflation is the result of a narrow group of goods and services.
Energy and Durable Goods — We expect the inflation effects from these increases to be “transitory”. The numbers don’t reflect the pandemic sharp decline in prices, so the resent spike will wash out over time (then another bluff tell @8:07).
My Socialist Point of View Paraphrase
As for the threat of rising wages on inflation : Don’t worry about higher wages contributing to increasing inflation. As has been the case since the 80’s, the “owners” are not going to increase the wages of the “workers” (even as productivity increases significantly), so we don’t have to worry about spiraling upward prices. We see little evidence of wage increases. We will continue to support corporations as they depress worker compensation. Our policy will continue to backstop the money and equity markets, and with that assurance of guaranteed liquidity, we will maintain (without any real economic foundation), corporate profits and stock prices rising for the foreseeable future.
“Longer term inflation expectations have moved much less than actual inflation.” So the financial establishment is all on board with this propaganda sales pitch — For the long term the resent inflation increase is “transitory”. And we will continue to manipulate the data over time. Pay no attention to the people behind the curtains and move along, there is nothing to see here. At 12:33 in the speech, there is that darn poker tell again. If this was a poker game, I would make a huge bet/raise right here.
Long Term Policy: A taper of continuing to add to the Fed balance sheet is still in the offing. And a raise in interest rates is still on the table. After all we are “banksters”. We can’t continue lending money (we create out of thin air) at such incredibly low interest rates. Throughout his speech, Chairman Powell never looks like a player confident in his hand, and he looks even less confident as he is summarizing in the last 5 minutes. At 16:30 he has pushed his chips in with a nothing hand, and then justifies his play. He says incoming data will show supply/demand imbalances are improving.
Finally he sends a strong signal to the oligarchy. We (the Fed) will eventually slow down buying your worthless corporate paper but don’t worry, the “Fed” always has your back. It’s about @18:36 where he (Chairman Powell) finally looks like he has a strong hand. That’s because he finally does have a strong hand. He tells (pun fully intended) the oligarchy and whomever is watching that the Federal Reserve policy will continue to keep the rich and powerful, rich and powerful. That is his job. Oh, and one more thing. Don’t play poker with Chairman Powell. Even though he is a horrible player, the game is rigged.