Larry Kudlow: Chinese Espionage and Espionage Has Infiltrated Our Country’s Central Bank

So Jay Powell’s Fed went ahead and raised its target rate by 75 basis points to 2.5%, as the world expected. No big surprise.

The stock market rose more than 500 points. Bonds are basically flat with the 10y at 2.79 and gold up $18.

I kinda think if he had a little more chest hair he would have done 100. My theory is just that the more the The Fed sets its target rate above inflation and drains excess liquidity from the economy and achieves price stability, the sooner the economy can pick up again.

Remember that the Fed’s recent tightening measures have yet to have a significant impact on the economy. It is still ahead of us. The economic slump in the first half of the year was mainly due to soaring inflation, which undermined real wages and real retail sales and completely undermined consumer and small business confidence.


Federal Reserve Jerome Powell

Federal Reserve Chairman Jerome Powell addresses the Senate Banking, Housing, and Urban Affairs Committee as he presents the Monetary Policy Report to the committee on Capitol Hill, Wednesday, June 22, 2022, in Washington. (AP Photo/Manuel Balce Ceneta/AP Newsroom)

The Conference Board’s consumer confidence survey is dropping like a stone. The July reading was 95.7%, a year ago it was 125.1%. That’s a 23% drop, and consumer inflation expectations for next year are 7.6%, which I think is about right.

Market signals point to a spike in inflation, but the descent will be difficult and it will take more than a year, possibly two years if the Fed is ever to return to its 2% target. So it’s not going to be easy and if you want any semblance of growth in the economy, you need to extend Trump’s tax cuts and slash Biden’s modern socialism, regulatory scourge.

Like his jihad against fossil fuels and for that matter the rest of business and his opposition to profiteering and his insistence that the focus of his radical progressive economic policy is income redistribution and radical climate activism. These policies must disappear. They hinder economic growth. Low taxes and tight money are the recipe. The Bidens don’t get it.

Now there is breaking news on the Fed. Chinese espionage and espionage have infiltrated our country’s central bank. Jay Powell denies it, but the Senate Homeland Security Committee, the FBI and Britain’s MI5 are on the trail, issuing a rare joint warning to all companies over Chinese espionage and hacking and to the Fed, aides research throughout the Federal Reserve. system have had illegal contact with the ruling Chinese Communist Party.

They are now arrested. China has tried to get its hands on economic models and key data points from the Federal Reserve and China has launched efforts for talent recruitment programs as well as information sharing.

This dates back to a 2015 Fed investigation, where they identified 13 persons of interest, dubbed the “P” network at 8 of the Fed’s 12 regional banks. Then, a former Fed employee, identified as “Z”, tried to recruit members of the network.

This stuff is from a novel by John LeCarre. Think “handyman, tailor, soldier, spy”. Rob Portman is the lead senator on the inquiry. He can play George Smiley in the new film replacing Gary Oldman. Why Jay Powell denies all of this is beyond me, but if he continues, we’re not going to give him a role in the movie.

Adding to the intrigue, a Fed economist traveling to Shanghai a few years ago, Chinese thugs burst into his hotel room, telling him he had to share sensitive information and advising the Chinese Communist government. They even monitored her phone calls surrounding an earlier divorce. These guys play hard! Very cruel.


Fed Chairman Jerome Powell

Federal Reserve Board Chairman Jerome Powell speaks during a press conference in Washington, DC on July 27, 2022. (Photo by MANDEL NGAN/AFP via Getty Images) ((Photo by MANDEL NGAN/AFP via Getty Images) / Getty Images)

Frankly, I don’t know why the Chinese want Fed forecasts because they are never good. Maybe Jay Powell is manipulating double agents to spread bad information, but, either way, it’s a dirty story. It’s about national security and it’s about the evildoing of the Chinese Communists.

This is one of the many reasons why Joe Biden should absolutely refuse to make concessions to China on tariffs, or sell strategic oil reserves, or anything else, but President Biden does not won’t be in the new movie.

This article is adapted from the opening comment by Larry Kudlow in the July 27, 2022 edition of “Kudlow”.

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