The Fed Finally Admits It Failed You. Here Is Why That Is Not Enough Yet.

They Are Finally Saying What I Have Been Saying for Years

Let me be very clear about something. The new Fed Chair stood up and essentially admitted that the people running monetary policy failed you. Not kind of failed you. Catastrophically failed you. He called the 2020 framework change a disaster that led to higher prices and did more harm to the least well-off Americans than he said he could have imagined. That is an extraordinary admission from someone sitting in that chair.

I have called inflation a tax on the American people for years. A regressive, hidden tax that the people in power never feel because they are not standing in a grocery store watching their weekly bill climb. Now the new chair is using the same language. He wants to un-stick sticky prices. He is calling out sixty-three months of above-target inflation. Welcome to the conversation, gentlemen.

The Numbers They Do Not Want to Show You Side by Side

Here is what the financial media celebrates versus what is actually happening in your life.

They celebrate: used car prices down 1.8 percent year over year.

What is actually happening year over year right now:

• Fuel oil up 42.9 percent
• Gasoline up 26.7 percent
• Electricity up 4 percent
• Food away from home up 3.4 percent
• Shelter up 3.3 percent
• Medical care up 2.9 percent

And if you zoom out seven years, new cars are up 22 percent. Used cars up 29 percent. Groceries have taken a beating. This is compounding inflation doing exactly what compound interest does, except instead of growing your wealth, it is destroying your purchasing power year after year after year.

Task Forces and Promises Are Not Enough

The new chair is putting together a reform task force. Mervin King from the Bank of England. Greg Mankiw from the Bush years. Credible people. I would add Judy Shelton to that list immediately because her perspective on sound money is exactly what has been missing from this conversation for decades.

But here is my honest assessment. Task forces are not policy. Testimony is not results. I am encouraged by the tone and I will give credit where it is due, but the American people have been burned too many times by Fed officials who speak boldly and then deliver timidly.

• The pundit class is already declaring inflation peaked and celebrating like the job is done.
• Oil prices are climbing again because of ongoing global conflict and can go parabolic fast.
• A slightly better CPI print does not undo five-plus years of embedded price increases.

The Bottom Line

The new Fed Chair is saying the right things. More right things than I have heard from that office in a very long time. But the American consumer, the working family, the retiree on a fixed income, they cannot afford to wait for task force findings and framework revisions. They are already behind. They are already damaged by the inflation tax that nobody in Washington wants to fully own.

The watchdog job is to keep the pressure on. To make sure the tough talk turns into results. And to make sure that when the financial media starts doing backflips over a single positive data point, you have the full picture sitting right in front of you.