I’ve spent 40 years here in the swamp, I mean, DC. And the most important thing I’ve learned is that decisions are largely made by institutional credibility. Institutions have self interests just like people do. And they end up pursuing them, even though they’re not a single individual, it’s a group. We just saw that with regard to Chairman Powell speech at Jackson Hole, Wyoming. The problem was the Federal Reserve, and the chairman had lost a lot of credibility. At their July meeting, the chairman gave a press conference in which he really didn’t sound very serious about fighting inflation, or more precisely, markets did not believe he was serious. Probably the most difficult line he said, was that a two and a half percent federal funds rate which they had just gotten to, was the neutral level. Well, that’s really not true. The two and a half percent neutrality assumes we have only 2% inflation. But we don’t have 2% inflation, we have 8% inflation. So saying two and a half percent was neutral, was kind of ridiculous, and it was confusing two markets. So to restore credibility, first, the Feds send out a lot of speakers to quote clarify. And then in Jackson Hole, Chairman Powell clarified it himself and I quote, in current circumstances, with inflation running far above 2%, and extremely tight labor markets, estimates of long run neutral are not a place to stop. In case you missed it, that means we’re going to raise rates going forward and probably raise them a lot. Powell said a few other things. Some people in markets speculated that they were going to move away from their 2% target inflation rate. And that would allow them to target higher inflation and do less rate increasing. He explicitly said that was not going to happen. Second, Powell said we’re going to have a sustained period of below trend growth. What that means is a long period of recession or semi recession. And he said that really was not going to stop the Fed. And third, he said, we are in for pain, in the form of higher unemployment, pain to businesses. He called these unfortunate costs. But they were not as bad as what would happen if the Fed didn’t act message. The Fed is willing to tolerate pain in the economy, in order to carry out his anti inflation message. It was a powerful speech. The markets now believe him. On the day of the speech, the Dow Jones Industrial Index fell 1000 points and has been dropping ever since. In addition, the Fed is taking money out of the system by getting rid of some of the bonds that had bought in what’s called the quantitative easing period. It’s now lowering the amount of bonds they hold by almost $100 billion a month. Well, quantitative easing sent asset prices up. Now we have quantitative pricing. It’s not hard to figure out if they’re doing the opposite of what sent stock prices up. It’s likely to send stock prices and other asset prices down. So Chairman Powell has regained institutional credibility. People in the real world should realize that and should adjust their own behavior accordingly.