The Fed Is Deep in Uncharted Waters. Danger Ahead
By Karen Petrou

Although Jay Powell delivered his all-important annual address atop a virtual Wyoming mountain, the Federal Reserve is nonetheless mired in the Big Muddy. This mythical river was described in a high-impact Pete Seeger song mobilizing Vietnam War opposition. In it, soldiers led by politicians start out in a small, clear stream, wade on and, as the waters rise and the mud deepens, keep going because they don’t and then can’t turn around. All they do is march on to a surely-grim fate. So too with U.S. monetary policy: It’s past time to turn around but still critical that the Fed quickly do so. Fed policy has three key components, none of which have worked as planned. The post-2010 recovery was the weakest since the Second World War; inflation constantly surprises the central bank; and markets keep rising to troubling and sometimes disastrous heights even as U.S. economic inequality gets steadily more acute.