In the 1947 version of the movie Miracle On 34th Street, veteran character actor William Frawley plays one of his best roles. He's a crusty old Ward Boss. A "part" I'll bet came naturally. And he's the political adviser to the Judge.
Now in the movie, Santa, or at least the character who plays Santa at Macy's is on trial to determine if he is the real Santa Clause, or not.
The Judge is about to declare him a fake when the Frawley character waves the Judge back to his chambers.
OH, Henry, Frawley yells, you're going to be an awfully popular fellow if you declare this man a fake. Thousands of children are going to love you, ruling there is no Santa. Christmas would be on hold.
Today, the name of the characters has changed. Today playing the part of the Judge is one Jerome Jay Powell, Chairman of the Federal Reserve.
And before him is the opportunity to also declare there is no Santa. That inflation is out of control.
Witness yesterday's Producer Price Index. Up an absolutely stunning 9.6%. Something we haven't seen in this country for a couple of generations.
Powell could pound his gavel, and declare that not only was he going to accelerate the taper, but he was going to immediately start raising interest rates to boot.
Many in the financial press would applaud this more assertive, stronger Chairman.
But it's then we need that Frawley character to come forward. Wave the Chairman into quarters, and explain the fact of life to him.
Henry, err I mean Jay, we're less than three weeks from year-end. In the next 16 day's everyone's retirement account will be valued.
Mutual Funds, Hedge Funds, Pension, and Private Funds will all state their yearly performance based on these last 2 weeks. Corporate bonuses will be handed out, based on year-end.
Major loans will be re-evaluated based on the underlying equity value of some major companies.
Henry, err Jay, you go right ahead. Tell the world that we've got this all wrong. That we should have been fighting inflation all this time. No more Mr. Nice Guy.
We're going after inflation hammer and tong.
You go ahead and do that.
And watch the Santa Rally on Wall Street turn to dust. Those annual reports, yet to be written, all come tumbling down.
No Jay, what you do now is you wait. You be the same old nice guy.
Don't you dare even hint at increasing the taper.
And heaven forbid you even mention raising interest rates.
This is not the time.
After all in a month, on January 25 and 26 we'll have our next FOMC meeting. Plenty of time to transform into the super inflation fighter. If you want to get tough do it then.
Not now.
After all, no one cares what you do at the beginning of the year. They've got 12 more months to deal with anything you throw at them.
Just don't do it now.
Now we need all sweetness and light.
And by the by, who scheduled this meeting? The FOMC only meets 8 times a year. But why meet two weeks before year-end?
This should be a time of strict "radio silence" by the Fed.
Make sure it doesn't happen next year.
Thanks, Mr. Frawley.
PS.
Just now, I'm getting the rumor that the Fed will NOT take my advice.
Instead of standing pat. They will go ahead and announce a more rapid taper, and more aggressive interest rate hikes.
We'll have to see if that indeed becomes their strategy.
