Chairman Powell needs to go…
If the Fed doesn't slow the pace of its monthly bond purchases in the next few months, its balance sheet will be close to $9 trillion by yearend. In the past three months alone, its holdings have expanded by $384 billion, to $8.45 trillion.
- Lisa Abramowicz, Twitter, September 16, 2021
By Gregg Wall (9-18-2021)
One of the more fascinating late summer stories was congressional house members called upon the Federal Reserve (FED) Chair, J. Powell, to be replaced by the Biden Administration. The members all hail from the progressive wing of the Democratic party - Reps. Alexandria Ocasio-Cortez, Rashida Tlaib and Ayanna Pressley (often referred to as the Squad). In particular, these members of congress are deeply concerned the FED chair hasn’t used his tremendous power to rein in Wall Street banks and their funding & investment in the fossil fuels industry. Moreover, the Federal Reserve -- unlike key central banks, globally -- hasn’t utilized monetary policy and regulatory authority to advance Green initiatives.
The fallout was immediate: with many neoliberal economists, disingenuously, claiming that it’s the role of the US congress to pass legislation to rein in banks and financial institutions, in regards climate change… knowing full well that the bickering & incompetent day traders in the congress will be lucky enough to pass Biden’s infrastructure bills before the 2022 campaign season heats up in earnest. There’s little doubt congress should play a role in this; but there’s also little doubt the U.S. central bank has a crucial role to play as well, since Wall St. banks & investments play a key role in the perpetuation of an industry that is killing the Earth.
The FED’s mandate, of course, includes price stability and full employment … and if there’s anything that has proven highly unstable - indeed, inflationary – it is the price of oil and energy. The other commodity that has shot through the roof for all Americans is the price of food, and here again, climate change plays no small role in diminishing crop yields and distressed livestock. In short, the Squad would appear to be one hundred percent correct in calling for a new FED chair, and perfectly within their right to pitch new legislation, Fossil Free Finance Act, mandating that U.S. banks get in line with the Paris Agreement.
Green initiatives are near and dear to my heart, but the other reason why I like this story so much is because the Federal Reserve basically operates in the shadows. It gets very little scrutiny from the MSM and the vast majority Americans have very little idea of what the FED does… or the outsized, undemocratic, and thoroughly unaccountable role it plays in their lives.
In short, the Squad has done all Americans a tremendous favor by calling attention, and perhaps, beginning a long overdue education of this most powerful branch of government.
Let’s take a quick look at the damage the hyperactive Federal Reserve has done the United States and the American people over the last couple of decades:
It has continuously bailed out Wall Street… and because of this, badly needed reforms in our financially engineered economy, and the catastrophic structural defects emanating from Wall St., are never addressed.
The Federal Reserve’s easy money policies have fueled M&A, industry consolidation, monopoly, monopsony, cartel, and financial engineering. As JMH has written on more than one occasion, all known killers of jobs, opportunity, innovations, and the economy itself.
The FED has created huge distortions in the economy, incenting speculation via a grossly overinflated stock market… instead of business creation, entrepreneurship, and jobs. Moreover, the FED’s easy money policies are responsible for disastrous wage and wealth inequality.
The FED, and three prior chairs (Greenspan, Bernanke, & Yellen), all funded endless – credit card – wars; and played no small part in the moral hazard surrounding those wars. The FED plays a key role in keeping asset prices and stock prices, in particular, elevated. Our stock trading Congress eats it up… hence, the perverse incentive to keep America’s finest – her soldiers – tied down in forever wars and engaged in failed nation building.
To say the Federal Reserve is the locus of all evil maybe an understatement. As mentioned, the American central bank is thoroughly unaccountable, elitist, undemocratic, and has entirely become a crutch for the failed U.S. congress and a morally bankrupt two-party system. The FED’s unwritten mandate appears to be to keep the whole house of cards afloat by printing more money and to apply jet fuel, easy money, to the stock market. Here, please notice, in particular, Ms. Abramowicz’s quote above and the FED’s ever expanding balance sheet.
I have no objection to the FED printing money to help everyday Americans… what I object to is the manner, in which, the Federal Reserve’s policies mint billionaires and catastrophic wealth out of thin air, which is a direct threat to democracy and sound government. Indeed, the future of the nation.
Moreover, the FED, and its chairs, should know better… They’ve been repeating the same Japanification/ultra-accommodative monetary policies for over two decades and with the same highly damaging consequences & effects. It’s not getting better; it’s getting worse.
But perhaps what is most dangerous about the FED is that it allows Congress to continuously escape accountability for domestic policy, budgeting, foreign policy, long overdue economic & political structural reforms (and this in turn is tearing the country asunder) … especially, perpetual Wall Street bailouts and the financing of endless wars. The FED enables the House & the Senate, forecloses upon very important conversations the Congress needs to be holding with the American people, like who we are as nation and what do we, and do we not, need & want to fund. Instead, Congress waves its wand, passes omnibus spending measures - perpetuating a failed status quo, tax cuts for the rich, and never has to account for where the money comes from (not with the ultimate sugar daddy, the FED, standing by). And as long as it’s welfare the rich, it’s all good.
Right now, presently, when POTUS Biden’s New Deal legislation is needed most, is not the time to rein in the FED… finally, when congress is on the verge of helping the American people, now is when we need the FED’s money printing capabilities as never before.
But the day is coming… a great reckoning is coming. The national debt is unsustainable, and despite elitist lies, it will never be repaid, not by this or future generations. Nor should current & future generations pay for a national debt accumulated, funding: bailouts for billionaires & Wall St; tax cuts for the rich; transferring wealth from the many to the few, via the debt & stock markets; nor financing credit card wars or endless corporate welfare (in brief, the FED has funded a massive billionaire welfare state, while elites & lackeys have crammed austerity down the American people’s collective throat).
Not a dime.
Bottom line: Kudos & accolades to the Squad for kicking off a long overdue - preliminary - education on the Federal Reserve and its chairs. Let’s hope these members of congress continue to use their voices, & power, to educate the American people.
This is an education that is long, long overdue.
Copyright JM Hamilton Publishing 2021
