"Inflation is a social phenomenon," Powell said. "If people believe that inflation will be higher, then it probably will be. And if they believe that inflation will come down, then people who make and take prices and wages, they will make sure that it does come down. So, it's absolutely critical that we be credible."
- Powell press conference
Should we give him the benefit of the doubt or just call out the craziness of this comment. Of course, inflation is effected by expectations but where do those expectations come from? Perhaps the Fed itself as the the producer of money!
You cannot just say that if you believe something, it will happen. Are expectations always rational? No. is a component of inflation expectations backward looking? Yes. However, if you are the head of the Fed, you have to take responsibility for your actions.
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