Chickenhawks

"You're all mouth, kid."
--Carl Hostrup (Reunion at Fairborough)

Various Fed heads have recently hit the tape with hawkish comments. They insist that rates must go much higher and balance sheet sales (a.k.a. 'quantitative tightening') must proceed much quicker in order to stem the inflation tide.

As Peter Schiff observes, the people at the Fed have not suddenly got religion. They are not hawks; they are chickenhawks.

By their hawkish rhetoric, Fed heads present the facade of inflation fighters--an inflation that they admit no blame for instigating. 

They surely also hope that markets will do work for them. Markets that anticipate huge interest rate hikes might tank, thereby relieving some inflationary pressures and impetus for Fed action.

Schiff argues that if the Fed heads were sincere about fighting big inflation, then they would have already acted aggressively. Big rate increases. Big balance sheet asset sales. But they haven't done so. All of the big moves that they are talking about will take place at some future, yet to be named date.

We also know that when markets do tank, then all semblance of hawkishness will disappear as the Fed resumes their customarily accommodative policy.

When facing a game of chicken with oncoming economic and market collapse, chickenhawks at the Fed will invariably flinch.