Jay Powell may think he is Paul Volcker, but he is not Paul Volcker.

The stock market is pretty terrible. The economic data are starting to roll over. The market is still pricing in terminal Fed funds of about 2.5%–3% in early 2023.

There is no way that happens.

The Federal Reserve is full of chickenhawks. They’re talking tough on inflation, and a lot of people believe them, but I don’t. It is a political weathervane, and it will crumble under the pressure. At some point—not today, but sometime in the near future—worries about the stock market and the economy will overtake worries about inflation. If you recall, the Fed only raised interest rates when it became politically necessary to do so. Now, Representative Jim Jordan (the guy who never wears a jacket) says your 401(k) would be better off under Trump. The Fed is not deaf to these comments.

I also want to point out that most Fed officials have never held a job outside the Fed, and those who have never held a job that gave them any practical experience. Here is a neat infographic from FOX Business:

We currently have a hot economy, but we do not have a good economy—they are two different things. The money the Fed and the federal government pumped into the system is still sloshing around, creating distortions. I am building a house, and I was advised to order appliances 18 months in advance because they are so backordered. Tried to buy a car lately? There are none to be found. Not only would a recession be welcome, it would be desirable. Throughout most of the last century, when you went to a car dealership, cars were there waiting for you. When you went to a grocery store, cat food was there waiting for you. Our economy is plagued by shortages and dysfunction.

And it is eminently fixable. All you have to do is raise interest rates—a lot. Members of the Fed have said their actions do nothing to fix the supply side—they only fix the demand side. And that is true. But if you fix the demand side, you also fix the supply side. Raise rates, the economy tanks, and people lose their jobs and cancel orders for appliances and cars. The supply chain issues are fixed. Magic. Which would you rather have, 7% unemployment or shortages of food, fuel, and durable goods? Depends on your point of view, I guess.