This morning, I opened my eyes and turned my head to the windows. I saw the bright sunshine reflecting off the grassy hill across the street. I rose to open the windows. I caught a lungful of fresh air, peppered with the scent of freshly cut grass. The sun’s rays warmed me.

I showered in my newly finished bathroom under a new rainfall showerhead. I sighed, “It’s Friday!”

My sister-in-law and her husband are visiting from Belgium. Last night, we ate Piedmontese agnolotti stuffed with meat and downed several Belgian beers. As the shower’s water was hitting my head, I realized I had no hangover, despite my best efforts.

Ah, the glory of God!

After dressing, I walked downstairs to make myself a freshly brewed coffee with panna fresca (heavy cream). Between the sunlight, breeze, and coffee, I thought I was in Heaven.

I walked back up the stairs to my recently cleaned office. (I didn’t want the kids to think I was a total slob.) 

My new habit every morning is to read at least one piece of my colleague’s newsletters. I haven’t been doing it enough, and I’ve missed some prescient stuff, like Dave Gonigam’s “Unconstitutional” call that I had mentioned in yesterday’s Rude.

As I scrolled through, one particularly caught my eye: “Jerome Powell Is NOT An Idiot.”

Ma che cazzo? (WTF?)

I managed to put my coffee down without spilling it, despite the sudden tremor in my hand. I hadn’t even opened the piece yet, but I felt my blood pressure rising. Tiny beads of sweat were gathering on my brow. The back of my neck was hot to the touch.

“Who the heck is defending Jay Powell this early in the morning?” I demanded of no one in particular.

Enrique. Enrique! My good friend. The first person I talk to on most days. How dare he wreck my Friday peace like that? The scoundrel.

Respectful Arguments Required

Let me start by saying I wrote all of the above in jest; well, almost all of it.

But what I genuinely love and respect is how Enrique injected nuance, understanding, and reflection into the debate about the Fed.

As you know, Dear Reader, obsessed goldbugs, disaffected Austrian School economists, and pseudo-fortune-telling Bitcoin maximalists dominate - and mutate - an honest appraisal of the Fed into a namecalling bitchfest.

I won’t do that here today. But I will take the other side of Enrique’s inadvertent debate.

First, About That “Winning Season”...

Enrique compares Powell to a top-tier NFL coach—someone with elite training, access to data, a professional team behind him, and a big-picture view we fans could never dream of.

Fair enough. But here's the problem with the analogy: NFL coaches are judged by actual wins and losses. Publicly. Weekly. Brutally.

When they lose, they don’t get to walk into the press conference and say, “We’re still looking at the data,” or “It’s probably transitory.”

They get fired.

In fact, since 2015, at least five head coaches have lost their jobs by the end of each season. In the previous decade, teams had fired a minimum of four head coaches by the end of the season.

Powell, on the other hand, ran ZIRP and QE into an already overheated economy, helped inflate the biggest asset bubble since 1929, and then told us inflation was a mirage.

Only when the CPI hit 9% and gasoline looked like a growth stock did he start hiking rates aggressively, chaotically, and late.

This isn’t coaching to win. That’s reacting to a fourth-quarter deficit Powell, himself, created by mismanaging the game for three quarters.

Powell’s performance is thrown into sharper relief because President Trump can’t fire him. I don’t care who you are; if you can’t get fired, your incentives are misaligned.

When asked directly whether he would leave his post if The Donald requested it, Powell responded, “No.” 

He clarified that “it’s not permitted under the law” for presidents to remove members of the central bank for reasons other than specific legal cause, such as misconduct or incapacity, rather than disagreements over monetary policy.

The “Trust the Experts” Argument

Nothing gets my inner, dormant libertarian up more than the “appeal to authority” fallacy.

Just because an expert says something doesn’t make it correct.

The experts were wrong about COVID. The experts were wrong about lockdowns. And they were most certainly wrong about the, ahem, “medicine.”

Or how about the “Treasury Tantrum of 2023,” where every analyst predicted a fall in the 10-year yield, only to have it spike? Every. Single. Analyst. Was. Wrong.

Enrique makes the case that Powell deserves respect because he’s trained, credentialed, and backed by elite teams of economists. And they all attended outstanding schools.

That’s not an argument. That’s credentialism. When deference to pedigree replaces the merit of argument, we don’t get better decisions—we just get bad decisions dressed in Ivy League robes. Expertise should inform debate, not end it.

And let’s not forget:

• Ben Bernanke, Princeton PhD, believed the subprime crisis was “contained.”
  
  
• Janet Yellen, Yale PhD, former Fed chairman, missed every inflation warning in 2021 as Treasury Secretary.
  
  
• Powell himself, who’s not even an economist (he’s a lawyer), said inflation was “transitory,” as used car prices skyrocketed and M2 grew faster than a viral TikTok short.

Meanwhile, figures like the ultimate economic nepo baby, Larry Summers (grandson of both Kenneth Arrow and Paul Samuelson), and Mohamed El-Erian warned that this would end in tears. That’s not to mention the Luke Gromens of the world.

They had no Fed staff, no printing press, and no Bloomberg Terminal in every room of the Eccles Building.

They just had eyes.

Don’t get me wrong. I think anyone can learn and become an expert in economics, even lawyers. However, I think Powell made poor decisions given the available data.

Let’s Talk About the Scoreboard

Powell’s defenders argue the Fed got us through COVID’s government-mandated private sector shutdown without a collapse. But who did the heavy lifting?

Hint: It wasn’t the Fed.

It was fiscal policy. It was Congress throwing $6 trillion into the economy—PPP loans, direct checks, child tax credits, airline bailouts, and expanded unemployment benefits.

What did the Fed do? It monetized it. Bought every Treasury in sight. Lowered rates when they were already low. Reignited QE as if 2020 was 2008 on steroids.

That’s not brilliance. That’s a reflex.

And let’s not forget the consequences:

• Tech valuations lost their barely passing acquaintance with gravity.
  
  
• SPACs, NFTs, meme stocks, and 20-year-olds on Robinhood made more money in 18 months than value investors made in a decade.
  
  
• Housing became a speculative asset class again. The average American couldn’t afford a starter home unless they were willing to sell their kidneys on the black market.

That’s not economic stewardship. That’s bubble-blowing. And eventually, bubbles pop.

The Fed Put

You know what investors have learned over the past 15 years?

The Fed will bail you out. The old Greenspan Put became the Fed Put. BTFD. (Sorry, you’ll have to look up that one yourself.)

Got a repo market panic in 2019? Here's a few hundred billion.

Markets down 20% in March 2020? QE infinity.

Regional banks wobbling in 2023? BTFP.

Wall Street whining about “tight conditions”? We’ll pause, pivot, and promise you soft landings.

That’s not coaching. That’s helicopter parenting.

And what do helicopter parents raise? Spoiled brats.

The U.S. financial markets are now a spoiled brat. Screaming when it doesn’t get what it wants, throwing tantrums when real rates go above 1%, and constantly expecting old Jay to tuck them in with another liquidity blanket.

But Wait—Didn’t Inflation Come Down?

Yes. After the Fed jacked rates from 0 to 5.5% in a panic, cratered M2 growth, and squeezed the economy until it said “Uncle!”

Let’s remember disinflation wasn’t all Powell’s doing. Supply chains healed. Fiscal stimulus faded. China went deflationary. Energy prices stabilized.

Inflation eased despite the Fed’s late action, not because of early foresight.

Ok, Let’s Give Credit Where It’s Due

I’m not saying Powell is evil, corrupt, or clueless.

I’m saying he’s a man doing a tough job, inside a system that makes long-term prudence almost impossible.

He has to answer to markets, media, and a government that spends money like a drunken sailor in a portside casino.

But let's not pretend he's a hero for getting us through a crisis the Fed helped create.

And let’s not ignore the fact that Powell himself admitted they made mistakes.

I’m not a “hater” for pointing out the obvious. We’re in a system where unelected officials control the price of money, the most critical signal in the economy.

When luminaries such as James Grant say, “The Fed has destroyed the pricing mechanism,” this is what he’s referring to.

The Fed, being the central bank, isn’t a license for blind trust. It’s the reason for perpetual vigilance.

Wrap Up

Enrique, I hear you. You brought nuance and institutional respect to a debate that often descends into Fed-bashing memes and Bitcoin hysteria.

I appreciate that and all you do.

But if we’re going to judge Powell like a coach, let’s look at the whole record:

• Inflated the asset bubble. (Ok, so all Fed chairs since Greenspan do it.)
  
  
• Missed the inflation surge.
  
  
• Crashed into rate hikes.
  
  
• Inverted the yield curve.
  
  
• Put the banking sector at risk.
  
  
• Celebrated the “soft landing” before the plane touched the tarmac.

Yikes! Is Powell doing more right than wrong? I’d argue the opposite.

However, I’ll tone it down, myself. Like Enrique wrote, Jerome Powell is NOT an idiot. But I’m not throwing any victory parties for him, either.

Now that I’ve calmed myself, it’s time for more coffee.

Have a wonderful weekend!