THE PUNCH BOWL HAS BEEN REMOVED! Former Federal Reserve chair William McChesney Martin famously said the task of the Fed is, “to take away the punch bowl just as the party gets going.” Look at how the latest stock market peak in early 2022 perfectly coincides with the lift-off of short-term interest rates (which the Fed has most control over). This is illustrative of the Fed’s intended impact across the entire economy to bring inflation down. The tricky part is not pushing the economy over a cliff. So far the Fed has pulled it off but the historical record is not as promising.