This Forbes history of interest rate hikes is immensely useful, but if you look at 2022-2023 and the fact that rates haven’t changed since July of last year, it would seem the FED is in no great rush to slash rates again. Why?

Well, because secondly, Powell wants as many levers at his disposal when a recession inevitably – and some might say “finally” – hits.

Meanwhile, across the Pacific, in a startling development, a Hong Kong court has issued a decree for the liquidation of the Evergrande Group, once revered as the world's most valuable real estate company. This colossal Chinese developer's downfall, unable to restructure its massive $300 billion debt, mirrors the challenges facing the Chinese economy—slow growth, escalating debt, and a diminishing workforce.

While the United States may not feel direct impacts for months, the analogies to other economic sectors are enlightening. As the adage goes, when America has a cold, the world sneezes. When the second-largest global economy faces adversity, it reverberates through the entire world. If China needs to stimulate its economy, it will likely pivot towards other industries and has potential to flood the global market with, for example, inexpensive electric vehicles. This would then force either of the 2024 United States major party candidates to pick a position on short-term tariffs. When these things happen, American consumers will notice.

The Evergrande crisis serves as a stark reminder of the fragility of global economic systems. Concerns about an overvalued commercial real estate market and escalating federal debt in the U.S. mirror China's predicament. Proactive measures are essential, and the lack of political discourse on these issues is troubling.

Which leads us back to Powell on 60 Minutes. When pressed by Scott Pelley on the national debt, while Powell was initially resistant to commenting, he did eventually relent.

(Edited for brevity):

POWELL: In the long run, the U.S. federal government is on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy. And I think we know that we have to get back on a sustainable fiscal path. It's probably time, or past time, to get back to an adult conversation among elected officials about getting the federal government back on a sustainable fiscal path.

PELLEY: I have the sense this worries you very much.

POWELL: Over the long run, of course it does. You know, we're effectively borrowing from future generations. And every generation really should pay for the things that it needs, but it really should pay for those things and not hand the bills to our children and grandchildren. I think this is, again, not controversial. But it's difficult from a political standpoint. It's not our business, really. But I do think it's pretty widely understood that it's time for us to get back to putting a priority on fiscal sustainability. And sooner is better than later.

Powell repeats multiple times that the Federal Reserve doesn’t comment on fiscal policy or instruct Congress on how to do its job. And yet, reading between the lines, what Powell is saying is that when we have a recession, the deficit is going to explode. He is clearly attempting to cool the continued run-up of the stock market and other asset classes to preemptively mitigate that fallout as well. Of course there are other issues at play, but the primary issue is keeping these bubbles in control and having the tools available when we have a recession.

Commenting is a big deal. Mentioning the debt is a big deal. And this is why rates have remained high.

He is bracing for a storm.

Stay Tuned.