So do you like your pickles served whole, halved, or in spears? I always liked this expression so I looked it up, and one urban dictionary reporting it can mean “being placed in a jam”. So looks as if analogies to food are alive and well these days. I don’t know how the upcoming (imminent change in Monetary Policy) is all going to play out, as there’s a huge dichotomy between what the U.S. bond market is signaling and what the stock market is beginning to believe. So far we’ve seen a somewhat lackadaisical attitude from Fed Chair Powell morphing into a nap-like auto-pilot-esque kind of forecast for inflationary pressures while, at the same time, Rome appears to be starting to flame-up, at least around the edges? Meanwhile, the U.S. stock market has been mostly agnostic toward the whole idea of a Fed tightening cycle ahead as growth stocks still maintain their market prowess, to date anyway. This fact has really surprised many a market pundit. And the stance among U.S. bond market participants has become one big “Missouri” in as far as its “show-me” attitude toward the higher interest rates conundrum. Simply said, the bond market is in need of some convincing no doubt as U.S. interest rates remain quite benign. All this, and now we add into the mix – could the Federal Reserve have fallen behind in their ability to easily quell these run-away U.S. inflationary pressures? Some pundits are voicing their opinions that this is indeed the case.

The reason we need even visit this subject is that if one looks back on history when our Federal Reserve gets “behind” in the orchestrating of monetary policy, things can turn quite ugly, quite fast. In order to temporarily cool an economic expansion so as to reduce inflationary pressures, that particular set of available tools usually comes with “un-intended consequences”. (Think of dropping a bomb on an enemy location, and when bombs explode they tend to spread out and innocent people can get hurt. Still, unintended consequences under monetary policy measures are not necessarily policy errors.) So we have it – remember that there are always winners and losers whether this economy is expanding or contracting because Monetary Policy is anything but an exact science. Some of us will be harmed by the implementation of these type measures, while others will prosper under the new circumstances. There will be those that lose their job and/or even lose their company, and still others that will see some assets fall in value, or maybe even disappear. New policy measures designed to eliminate rising inflation are not a pretty exercise to go through if/when the Federal Reserve gets behind the 8-ball. Many people are still too young to remember the last time we lived through a “Volcker moment” in these United States. Paul Volcker was Fed Chair during the tail-end of the Carter years, then re-appointed during the Reagan years. Volcker was credited for rescuing the United States from the worst runaway inflation maybe in a century. Policy measures designed to reduce inflation are accomplished while the consequences can be quite random during any repair process timeframe, that’s what I want to convey to you here. That the Fed is “in a Pickle” and pickles eventually escape out of the jar that hold them but always for the greater good of a society… so don’t be surprised by any surprises that may lie ahead in yours or your neighbor’s personal circumstances. 😉