Earlier this year, the idea of the Fed raising rates by three-quarters of percentage point wasn’t on the menu. But in just a few months, that sizable jump has become the norm, and it’s almost certainly sealed Jay Powell’s status as the Paul Volcker of the 2020s. Here’s the deal: The Federal Reserve made history today, approving its third consecutive 75-basis-point interest rate hike. Once again, the Fed is trying to wring inflation out of the economy by using the most powerful and broad lever it has — controlling how much it costs for businesses and people to borrow money. The benchmark lending rate is now the highest it has been since the global financial crisis of 2008, my colleague Nicole Goodkind reports. So, here’s what you need to know: One of Powell’s biggest critics, Senator Elizabeth Warren, was quick to fire off a tweet decrying the “extreme” hike, which the Fed itself expects will push unemployment up to 4.4% from 3.7% currently — amounting to more than 1 million jobs. “Chair Powell just announced another extreme interest rate hike while forecasting higher unemployment,” Warren tweeted. “I’ve been warning that Chair Powell’s Fed would throw millions of Americans out of work — and I fear he’s already on the path to doing so.” Powell doesn’t like to say words like “layoff” or “job cuts.” But he’s not unsympathetic to what he euphemistically calls “softening of labor market conditions.” He just thinks that the short-term pain of a recession would be preferable to the longer-term pain of entrenched inflation. To set the labor market up for sustained strength, he said, we have got to get inflation behind us. “I wish there were a painless way to do that. There isn’t.” STEP BACK To understand the Fed, it helps to understand Powell. In his role as the central bank chief, he’s made no secret of his admiration for Paul Volcker, whose name is practically synonymous with fighting inflation at all costs, even if it crashes the economy into a recession. That’s exactly what Volcker’s Fed did — twice — in the early 1980s. During congressional testimony in the spring, Powell described Volcker as a hero, calling him “the greatest economic public servant of the era.” (Fun fact: The 6-foot-7 Volcker was also known in DC by his nickname, “Tall Paul”) At least twice in the past month, Powell has publicly invoked the title of Volcker’s 2018 biography “Keeping At It.” In his now notoriously blunt Jackson Hole speech last month, Powell declared that “we must keep at it until the job is done.” And again Wednesday: “We want to act aggressively now and … keep at it until it’s done.” Part of the reason Volcker is remembered so favorably by Powell and others is that it required a savvy mind and an iron stomach to a) understand the problem of rampant inflation, and b) implement the painful shock therapy of interest rate hikes that cost millions of people their jobs. Volcker’s plan worked, but it really sucked for a while. There was indeed some pain, to borrow Powell’s euphemistic phrasing. Inflation is now the highest it’s been since Volcker ran the Fed, and the central bank itself is facing a crisis of credibility after not moving fast enough to keep rising prices in check. Credibility was a big concern for Volcker as well. “Volcker’s mantra, one he told me again and again through 2008-9, was that in a crisis the only asset you have is your credibility,” Austan Goolsbee, an economist who advised the Obama administration, wrote in 2019 just after Volcker died at age 92. Bottom line: Powell continues to draw from the Volcker playbook, which means he’s unlikely to waver on the Fed’s target rate of 2% inflation, lest the central bank’s credibility take another blow. Only time will tell whether that 40-plus-year-old playbook still applies in an economy that’s fundamentally different from the one Volcker confronted. NUMBER OF THE DAY 5.2 million Congrats, rich people — you ranks are multiplying. Thanks to gains in the stock market and soaring home prices, the world got another 5.2 million millionaires last year, nearly half of whom are in the United States. It’s the largest increase in millionaire numbers for any country in any year this century, according to Credit Suisse, which published its annual global wealth report this week. The total number of millionaires stood at 62.5 million at the end of 2021. Aggregate global wealth jumped nearly 10% to a total of $463.6 trillion at the end of last year. Meanwhile, the pandemic has pushed about 100 million people into extreme poverty, raising that global total to 711 million in 2021, according to the World Bank. LAWSUITS PILE UP Donald Trump, who is already facing several criminal investigations from federal and state prosecutors over matters including his company’s financial statements, interference in the 2020 election, and his handling of classified documents, was just hit with another bombshell accusation of an expansive, decade-long fraud. Here’s the deal: The New York state attorney general filed a lawsuit against the former president, three of his children and the Trump Organization, the culmination of a three-year investigation into the family and its namesake company. The lawsuit is more than 200 pages long, and it includes accusations of fraud that touched all aspects of the Trump business. Let’s break down some of its key points: Trump has denied wrongdoing in every case against him. He’s previously called James a “renegade prosecutor” who he said is running a “vindictive and self-serving fishing expedition.” In response to the latest lawsuit, a Trump attorney reiterated his disdain for James, saying the filing “is neither focused on the facts nor the law – rather, it is solely focused on advancing the Attorney General’s political agenda, adding that “absolutely no wrongdoing has taken place.” Weisselberg’s attorney declined to comment. Here’s just one of the 200 examples laid out by James’ lawsuit: There’s a lot to unpack in this lawsuit. My CNN colleagues are all over it. Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day work week around here.)