Illustration: Lazaro Gamio/Axios

In his speech at Jackson Hole on Friday Fed Chair Jerome Powell effectively acknowledged that the world has reached the end of monetary policy as we know it.

What's happening: While central banks could rest assured they had the tools to rein in inflation and unemployment in the old days, that's now uncertain in this new world.

Why it matters: Central bank policy was the biggest factor in pulling the global economy out of the financial crisis in 2009 and has been the primary force driving markets for the past decade.

  • Central banks are cutting interest rates at a pace not seen since the crisis in an attempt to stave off the global economic slowdown that's been picking up speed this year, but it may be futile.
  • The escalation of the trade war is exacerbating already troubled and highly indebted economies in Europe, Japan, China and elsewhere.

The big picture: Powell's speech was a daunting admission that the all-powerful Federal Reserve may be powerless to stop a recession if it reaches the U.S. — at least with its current box of tools.

  • There are “no recent precedents to guide any policy response to the current situation," Powell said Friday, referencing the trade war.

Between the lines: Worry about the waning impact of monetary policy was also recently voiced by former Treasury Secretary and National Economic Council head Larry Summers.

  • Summers notes in a piece with co-author Anna Stansbury that there are "strong reasons to believe that the capacity of lower interest rates to stimulate the economy has been attenuated — or even gone into reverse."
  • Worse, they argue that in recent years additional government spending also has proven less effective at boosting the economy.

The last word: "As we look back over the decade since the end of the financial crisis, we can again see fundamental economic changes that call for a reassessment of our policy framework," Powell said at Jackson Hole.

  • "To address this new normal, we are conducting a public review of our monetary policy strategy, tools, and communications — the first of its kind for the Federal Reserve ... and we are asking whether we should expand our toolkit," Powell said.

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Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Global: Total confirmed cases as of 6:30 a.m. ET: 30,199,007 — Total deaths: 946,490— Total recoveries: 20,544, 967Map
  2. U.S.: Total confirmed cases as of 6:30 a.m. ET: 6,675,593 — Total deaths: 197,644 — Total recoveries: 2,540,334 — Total tests: 90,710,730Map
  3. Politics: Former Pence aide says she plans to vote for Joe Biden, accusing Trump of costing lives in his coronavirus response.
  4. Health: Pew: 49% of Americans wouldn't get COVID-19 vaccine if available today Pandemic may cause cancer uptick The risks of moving too fast on a vaccine — COVID-19 racial disparities extend to health coverage losses.
  5. Business: Retail sales return to pre-coronavirus trend.
Mike Allen, author of AM
2 hours ago - Politics & Policy

Scoop: Mike Bloomberg's anti-chaos theory

CNN's Anderson Cooper questions Joe Biden last night at a drive-in town hall in Moosic, Pa., outside Scranton. Photo: CNN

Mike Bloomberg's $100 million Florida blitz begins today and will continue "wall to wall" in all 10 TV markets through Election Day, advisers tell me.

Why it matters: Bloomberg thinks that Joe Biden putting away Florida is the most feasible way to head off the national chaos we could have if the outcome of Trump v. Biden remained uncertain long after Election Day.

Biden's hardline Russia reset

Photo Illustration: Eniola Odetunde/Axios. Getty Images photos: Mark Reinstein

When he talks about Russia, Joe Biden has sounded like Ronald Reagan all summer, setting up a potential Day 1 confrontation with Russian President Vladimir Putin if Biden were to win.

Why it matters: Biden has promised a forceful response against Russia for both election interference and alleged bounty payments to target American troops in Afghanistan. But being tougher than President Trump could be the easy part. The risk is overdoing it and making diplomacy impossible.