Six Heads and a Whirlpool

The Odyssey is an epic poem written by Homer, telling the story of Odysseus, a Greek warrior embarking on a long journey home to Ithaca after the Trojan War. Along the way, Odysseus faces many adventures and must battle monsters, gods, and the sea itself. He eventually makes it home, but not before enduring a series of obstacles and tasks set by the gods.

Jerome Powell, Chair of the Federal Open Market Committee, has an epic life by most standards.  It is a tale which is currently bookended by time spent in his birth city, Washington D.C.   His current assignment is overseeing our nation’s monetary policy, but before serving at the behest of both President Trump and President Biden, he spent time serving under President George H. W. Bush at the U.S. Department of Treasury.  Prior to that assignment, he spent time as an attorney and investment banker in New York City.

Odysseus faced a particularly difficult passage during his trip home to Ithaca from the Trojan War.  The path was narrow and flanked by Scylla (a six-headed monster) on one side and Charybdis (a huge whirlpool) on the other.  Faced with a difficult choice, he moved closer to Scylla.  This move allowed him to escape complete ruin from the wrathful whirlpool, but it cost the lives of six of his crewmen.

Jerome is already home but faces beasts of mythical proportions.  On one side, he faces the history of the late 1970s and early 1980s.  It was period of high inflation which was arguably exacerbated by central bank mistakes before drastic measures were taken to rein it in.  On the other side are recent memories of the Great Financial Crises, a period of bank failures and an ailing economy.  We’ve already seen the second-largest bank failure in American history this month, so any concerns he’s feeling are understandable.

It remains unclear which path is best.  Ask any number of analysts and you’ll get any number of answers.  While there might be some firms sacrificed along even the best course, Jerome Powell does not want to be at the helm during a whirlpool of ruin.  It seems reasonable to expect he and his central bankers (along with foreign central banks) will put in every effort they can to keep the economy on course to better days on the other side of this passage.