The Washington post said that Powell had “adopted a strategy that works like a one-way ratchet, providing a floor for stock and bond prices but never a ceiling” and that any attempt to taper “will trigger a sharp sell-off by investors who have become addicted to monetary stimulus”
In June 2020, Jim Grant called Powell’s Wall Street Dr. Feelgood.
In January 2021, Edward Luce of the Financial Times warned that the Fed’s use of asset purchases could lead to economic instability saying “The majority of people are suffering amid a Great Gatsby-style boom at the top”.
Cryptocurrencies also saw dramatic increases in price during 2020, leading Powell to win the 2020 Forbes Person Of The Year In Crypto.
“You can’t lose in that market,” said Jim Cramer, adding “it’s like a slot machine” that always pays out. “I’ve not seen this in my career”
“High up on his list, and sooner rather than later, will be dealing with the consequences of the biggest financial bubble in U.S. history. Why the biggest? Because it encompasses not just stocks but pretty much every other financial asset too. And for that, you may thank the Federal Reserve.” said Richard Cookson to Bloomberg.
No one knows exactly when the music will stop and who will be left standing after the taper. Jerome Powell is determined to not take away Wall Street’s punch bowl just yet, vowing that when the taper begins, it will be slow and gradual.
The Federal Reserve has had a long history of intervention in U.S financial markets. Proponents of Bitcoin actually argue that this is the reason we need cryptocurrency: To stop the never-ending inflation of asset prices and put a stop to the madness.
Are we in a bubble? Do you think that Jerome Powell knows what he’s doing, or are we leading our economy into an eventual crash? Let us know.