Tone-Deaf Fed President Jokes About “Whopping” Golf Membership Fees 

An ominous sign about today’s high inflation environment, and quite clearly the Federal Reserve is behind the hiking curve, is a contact close with the Fed complaining about out-of-control golf membership prices. 

Yes, you heard that correctly. Federal Reserve Bank of Philadelphia President Patrick Harker’s speech cited “one of our contacts,” presumably a Wall Street banker or corporate elite, complained about the “whopping membership fee increases at his golf club.”

Harker said the contact even “suggested it may be a good time to play at your local muni instead” of a private course. 

As Matt Taibbi of TK News notes,

“I know I’m a little out of practice, because just as I was about to begin speaking, I made sure my mute button wasn’t on,” he cracked. “In all seriousness…”

Shifting to a graver theme, he mentioned the old saw about being cursed to live in “interesting times.” The novel coronavirus, he said, “has tragically killed at least 6 million people globally and around 1 million here in the United States,” adding, “That’s the equivalent of a city larger than San Francisco or Seattle.” Russia has also invaded Ukraine, he said, “fomenting death and destruction and spurring a humanitarian crisis in the heart of Europe.”

Next in this parade of calamities: the scourge of inflation, a problem so serious that it touched him and his colleagues personally.

“One of our contacts, for instance, mentioned whopping membership fee increases at his golf club,” Harker said, “suggesting this summer may be a good time to play at your local muni instead.”

*  *  *

The Fed member continued to say “generous fiscal policies, supply chain disruptions, and accommodative monetary policy have pushed inflation” to a four-decade high. 

Notice Harker’s listing of inflation’s culprits and how “accommodative monetary policy” is last. In our view, that should be first, though the Fed will never admit creating money out of thin air is the root of all inflation. 

The voting Fed member is onboard for “methodical hikes as the year continues and the data evolve.” He also anticipated that the Fed’s balance sheet of Treasury securities, agency debt, and mortgage-backed securities would be reduced. 

He said he agrees with the current Fed view of seven rate hikes, estimating the Fed to move quickly toward a neutral federal-funds rate target of approximately 2.5% later this year. 

Harker’s speech comes hours after the 2s10s Treasury curve inverted, the most-monitored, the most-studied, and the most accurate predictor of recession the market offers.

Last week, Fed Governor Christopher Waller told an audience that his home searching in Washington, D.C., ran into a brick wall due to low inventory and high prices. 

For two top Fed members to point out inflationary woes at the highest levels, even affecting themselves or other elites, suggests they’re way behind the hiking curve. 

For a sense of just how far behind, the Taylor Rule suggests given the current inflation rate and unemployment rate, the Fed needs to hike by an absurd-sounding 1155bps to get back to ‘normal’…

Today’s ongoing phenomenon of high inflation is not fading and has been exacerbated by Russia’s invasion of Ukraine, which might call for aggressive rate hikes in upcoming FOMC meetings. Happy hiking Powell, the bond market sees danger ahead, and a soft-landing has never been achieved.