What does Jerome Powell, chair of the Federal Reserve, understand that Vladimir Putin doesn’t?
OK, I know that may sound like a trick question, or a desperate effort to offer a counterintuitive take on recent events. We may say that the Fed has gone to war against inflation, but that’s just a metaphor. Russia’s war on Ukraine, unfortunately, is all too real, leading to tens of thousands of deaths among both soldiers and civilians.
Yet the Fed and the Putin regime have this in common: Both took major policy actions this week. The Fed raised interest rates in an attempt to curb inflation. Putin announced a partial mobilization in an attempt to rescue his failed invasion. Both actions will inflict pain.
One important difference, however — aside from the fact that Powell is not, as far as I know, a war criminal — is that the Fed is acting to maintain its credibility, while Putin seems determined to squander whatever credibility he might still have.