{"id":15259,"date":"2021-12-13T20:54:33","date_gmt":"2021-12-13T20:54:33","guid":{"rendered":"https:\/\/www.buyucoin.com\/crypto-labs\/economist-mohamed-el-erian-says-feds-characterization-of-inflation-as-transitory-the-worst-call-in-history\/"},"modified":"2021-12-13T20:54:33","modified_gmt":"2021-12-13T20:54:33","slug":"economist-mohamed-el-erian-says-feds-characterization-of-inflation-as-transitory-the-worst-call-in-history","status":"publish","type":"post","link":"https:\/\/www.buyucoin.com\/crypto-labs\/economist-mohamed-el-erian-says-feds-characterization-of-inflation-as-transitory-the-worst-call-in-history\/","title":{"rendered":"Economist Mohamed El-Erian Says Fed\u2019s Characterization of Inflation as \u2018Transitory\u2019 the \u2018Worst Call in History\u2019\u00a0"},"content":{"rendered":"

On Monday, December 13, following Friday\u2019s U.S. consumer price index report published by the Bureau of Labor Statistics, Americans are discussing the Federal Reserve. Thousands of tweets concerning the Federal Reserve topic have been trending on Twitter, as inflation has gripped the U.S. economy. Furthermore, Mohamed El-Erian, the chief economic advisor for the German multinational financial services company Allianz says the term \u201ctransitory\u201d was the \u201cworst inflation call in the history,\u201d according to a recent interview.<\/strong><\/p>\n

Allianz Chief Economic Advisor Says Calling Inflation \u2018Transitory\u2019 Was a Bad Call by the US Central Bank<\/h2>\n

At the end of April 2021, members of the Federal Open Market Committee (FOMC), told the American public<\/a> that the Federal Reserve would keep the benchmark interest rate near zero and monthly bond purchases would continue. The FOMC\u2019s and Fed chair Jerome Powell\u2019s statements stressed<\/a> that inflation would only have \u201ctransitory effects\u201d on the American economy. Not only did members of the Fed say inflation would be temporary, but it was also parroted routinely<\/a> by the media, U.S. policymakers, and America\u2019s banking giants<\/a> as well.<\/p>\n

If the US really paid its debts the Federal Reserve wouldn’t be monetizing them.<\/p>\n

\u2014 Axiomatic Enemy of the State (@DeTocqueville14) December 13, 2021<\/a><\/p>\n<\/p>\n

Just before the Bureau of Labor Statistics\u2019 November consumer price index (CPI) report was published, the \u2018transitory\u2019 talking heads started to back peddle on saying that inflation was temporary. The latest CPI report indicated<\/a> that the metric jumped the highest its ever been in close to forty years, skyrocketing to 6.8% over the same period in 2020. The cost of goods and services in America continues to rise month after month, and a lot more Americans are starting to point fingers at the U.S. central bank.<\/p>\n

For instance, the name \u201cFederal Reserve\u201d is trending quite a bit<\/a> on Twitter and can be seen in thousands of tweets in the United States. On Sunday afternoon, the chief economic advisor for the German multinational financial services company Allianz criticized the Fed<\/a> on the broadcast CBS\u2019 \u201cFace the Nation.\u201d Mohamed El-Erian says that the description \u201ctransitory\u201d was one of the worst calls in the Federal Reserve\u2019s history.<\/p>\n

\u201cThe characterization of inflation as transitory is probably the worst inflation call in the history of the Federal Reserve, and it results in a high probability of a policy mistake,\u201d El-Erian insisted during his interview. \u201cSo, the Fed must quickly, starting this week, regain control of the inflation narrative and regain its own credibility,\u201d the Allianz chief economic advisor said. El-Erian further added:<\/p>\n

Otherwise, it will become a driver of higher inflation expectations that feed onto themselves.<\/p>\n

Critics Denounce the Fed\u2019s Actions Using Terms Like \u2018Fraud\u2019 and \u2018Bankrupt,\u2019 El-Erian Says the Central Bank Can Still Change Its Course<\/h2>\n

Sven Henrich<\/a>, the analyst behind northmantrader.com<\/a>, denounced U.S. president Joe Biden\u2019s recent tweet when the president said he was raising the debt limit. \u201cThe United States pays its debt obligations by taking on even more debt,\u201d Henrich tweeted<\/a>. \u201c[And] when it can\u2019t find enough buyers for its debt, it has the Federal Reserve buy its debt, currently to the tune of over $5.6 trillion. [And] if rates were to go back to 2007 levels the U.S. would be bankrupt.\u201d<\/p>\n

Next year they\u2019ll tell you that inflation has peaked as price increases will have stabilized and you will feel better when you shopping. pic.twitter.com\/P4LlMeNHxn<\/a><\/p>\n

\u2014 Sven Henrich (@NorthmanTrader) December 12, 2021<\/a><\/p>\n<\/p>\n

The popular finance author Carol Roth<\/a> also roasted the Fed\u2019s monetary policy decisions on Twitter. \u201cIf you were to go into your bank account, digitally increase your balance, and then use that new balance to buy things, it would be called fraud,\u201d Roth said<\/a>. \u201cWhen the Federal Reserve does that, it is called monetary policy,\u201d she added. During his CBS interview, El-Erian claimed there\u2019s a chance the U.S. central bank could take the reigns and control the economy. \u201cIf they catch up now, if they\u2019re honest about their mistake and take steps now, they can still regain control of it,\u201d El-Erian remarked.<\/p>\n

As of right now, the Federal Reserve has been talking about rate changes and tapering back quantitive easing measures, but so far has yet to implement any of its discussions. El-Erian opined that the U.S. central bank should, however, \u201cease their foot off the accelerator,\u201d instead of tapering at an extremely fast rate. The economist further said that rather than the rich being affected by inflation, like a number of media pundits have claimed publicly<\/a>, El-Erian insists it is low-income households that suffer more from rising inflation.<\/p>\n

\u201cThere is the possibility that they may have to raise rates,\u201d El-Erian concluded. \u201cLook, it\u2019s important to stop inflation [from] being embedded into the system because two things happen when inflation gets embedded. One, you lose purchasing power, and the poor suffer the most. Second, you get a Fed overreaction and then you get a recession and then you get income losses. So, you really want to navigate this process in a timely and orderly way.\u201d<\/p>\n

What do you think about the recent criticisms toward the U.S. Federal Reserve and Mohamed El-Erian\u2019s statements about the Fed\u2019s \u2018transitory\u2019 description of inflation? Let us know what you think about this subject in the comments section below.<\/strong><\/em><\/p>\n

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\nEconomics, 1982, Allianz, American Public, Bureau of Labor Statistics, Carol Roth, cars, consumer price index, CPI, economics, Economy, El-Erian, Energy, Fed, Federal Reserve, Food, Housing, inflation, Inflation rising, inflation transitory, jerome powell, Liquidity, Mohamed El-Erian, persistent inflation, Political Class, Purchasing Power, Sven Henrich, transitory, US Inflation<\/p>\n","protected":false},"excerpt":{"rendered":"

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