I think there is a soft-war going on between the Fed and Congress....I know its usually viewed that they act in concert (and they usually do), however I think the dynamic has shifted recently.

Powell has trying to sheepishly raise rates....hoping to suck up excess liquidity, but more importantly...trying to induce congress to control spending.

He has now wound up in very bad situation: The govt is simply refusing to back down on spending, thus any increase in interest rates perversely increases inflation as it prompts the gov to issue more bonds to pay every higher interest on debt. Once you get to the point that raising interest rates no longer controls monetary expansion, you are really off the rails....

If Powell has balls, he would continue to raise rates even in the face of the continued bond issuance, knowing that eventually the bond sales will start to fail. At some point the market will stop accepting 5% yield and bond sales will be repriced for 10-15% yield.

Will that even stop spending tho? Does anyone believe that any political figure could "cut the federal workforce by 50%"? That would be tens of millions of job cuts.....