Corporate bankster Jamie Dimon, head of one of the largest financial institutions in the world, warned of cataclysmic economic havoc in large part due to the inevitable clash of Federal Reserve policy and runaway inflation. The JPMorgan CEO appeared at a recent conference and upgraded his forecast from storm clouds to an all-out tempest.
“I said there were storm clouds. But I’m going to change it. It’s a hurricane. Right now it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle it. That hurricane is right out there down the road coming our way. We don’t know if it’s a minor one or Superstorm Sandy.
He ended with an ominous heed for self-preservation and protection: “You better brace yourself.”
The impact of a tightening monetary policy from the Federal Reserve, which for years has made money practically free – lowering interest rates during the Trump era despite no real reason to do so – is a natural precursor to an economic slowdown. However, the rampant inflation seen throughout the world due to printing trillions of new dollars during the Covid-response and Biden eras is not helping.
Fox News elaborated on the presentation by Dimon and highlighted similar concerns:
“There are two main issues that Dimon said are worrying him [Dimon]: The Federal Reserve moving to unwind its $8.9 trillion balance sheet, deploying a less-known tool known as quantitative tightening that will further tighten credit for U.S. households as officials try to tame red-hot inflation.
The rundown of the Fed’s portfolio is poised to begin on Wednesday at an initial combined monthly pace of $47.5 billion. The Fed will increase the runoff rate to $95 billion by September, putting the central bank on track to reduce its balance sheet by about $3 trillion over the next three years.”
Dimon noted that “[w] e’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years.’ Of course, Dimon was referring to the approach of quantitative tightening, the opposite approach of quantitative easing, with which many more casual followers of the economy are likely familiar. In quantitative easing, theorists speculated they could master inflation. It turns out Economics 101 was right all along, and those supply-demand curves are stubborn things.
Fox News continued with additional aspects of the looming hurricane of economic destruction.
“The second matter weighing on Dimon is the Russian-Ukraine war and its effect on the price of commodities like food and oil. The bank CEO said that oil could hit $150 or $175 a barrel as a result of the conflict, which began in late February. Brent crude, the benchmark, is currently selling for $116 a barrel.
“Wars go bad. They go south. They have unintended consequences,” he said.
Dimon’s comment comes amid growing fears on Wall Street that the Fed may drag the economy into a recession as it seeks to tame inflation, which climbed by 8.3% in April, near a 40-year high. Bank of America, as well as Fannie Mae and Deutsche Bank, are among the Wall Street firms forecasting a downturn in the next two years, along with former Fed Chairman Ben Bernanke.”
Hailey Sanibel fiercely loves freedom. She is a contributing author at Trending Politics and writes regularly at The Blue State Conservative.