Jerome Powell "The question we are asking ourselves the first weekend is how did this all happen."


The Fed held interest rates too low too long, once again.

The Fed even wanted to make up for lack of prior inflation, initially welcoming the pickup of inflation.

The Fed failed to understand how $9 trillion in QE would fan asset bubbles.

The Fed failed to understand how three rounds of fiscal stimulus, the largest in history, would fan inflation.

The Fed presidents believe in economic models such as inflation expectations that its own studies prove do not work. 

When inflation did pick up, the Fed kept inisting that inflation was transitory.

Even when the Fed finally realized inflation was not transitory, it kept QE going until the bitter end, not wanting to disturb prior forward guidance.

The San Francisco Fed, whose job it was to monitor Silicon Valley Bank (SVB) was asleep at the wheel.

The Fed considers treasuries a risk-free asset, ignoring duration risk.

The Fed ignored a record concentration of long-term treasury and mortgage assets at SVB despite understanding the interest rate risk of those assets.

The Fed's forward guidance has been a disaster. It openly encouraged speculation. 

The Fed reduced reserve requirements on deposits to ZERO. 

Dear chairman Powell, instead of wasting taxpayer money on a study that will undoubtedly attempt to whitewash the Fed's responsibility, please address each of the above twelve points. 

MIsh 23 March 2023


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