For about a month, we've heard that maverick Democrat Sen. Joe Manchin killed Build Back Better, or BBB, the big spending program promoted by President Biden and Democrats.

In reality, it was Chairman Jerome Powell of the Federal Reserve who killed it.  Let's see the story:

To get back to normal, the U.S. must first figure out a way to deal with rising inflation, which is expected to top 7% in December, CNBC reported. To battle inflation, the Fed plans to scale back its asset purchases and raise interest rates.

"As we move through this year… if things develop as expected, we'll be normalizing policy, meaning we're going to end our asset purchases in March, meaning we'll be raising rates over the course of the year," Powell said. "At some point perhaps later this year we will start to allow the balance sheet to run off, and that's just the road to normalizing policy."

In short, no more stimulus!  No more checks to people.  Inflation is topic #1!

Some of us saw this movie in 1981–83.  Who remembers Paul Volcker, the Fed chairman at the time?

In order to defeat inflation, he pushed interest rates to 20%, and we got a major downturn, which some called the biggest since the Great Depression.

Do you remember 11% unemployment in 1981–83?  It killed President Reagan in the 1982 midterms but did set the table for the economic recovery of late 1983 and 1984.

As I recall, 1982 was a terrible year all over the world.  It got so bad that Paul McCartney put the currency crisis to music with "The Pound Is Sinking": "The pound is sinking, the peso's falling, the lira's reeling and feeling quite appalling."

Yes, it did feel quite appalling that year of 1982.  I don't know how bad it will get, but Mr. Powell has to hit the brakes as Mr. Volcker did back then.  "Inflation is always and everywhere a monetary phenomenon," as Milton Friedman put it back in 1963.  Joe Biden is the only guy out there still arguing with it.

PS: You can listen to my show (Canto Talk).

Image: Federal Reserve via Flickr, public domain.