Goodbye Mr. Powell… Economic Data in the Service of Greed
The U.S. national debt crossed 100 percent of gross domestic product (GDP) at the end of March, with signs that it might cross the record of 106 percent of GDP reached immediately after World War II.
The Bureau of Economic Analysis released data on the national debt reaching 100.2 percent of GDP on Thursday, noting that debt held by the public on March 31 was $31.27 trillion. GDP over the last year was $31.22 trillion.
- US debt exceeds 100 percent of GDP, The Hill
Gregg Wall (5-2-2026)
JMH typically does a couple of write ups on the FED and central banks, per year. As a student of history and power, I’ve always found the most powerful branch of government, the Federal Reserve … and the post powerful man in the U.S. government, the FED chairman… fascinating. Mr. Powell certainly did not fail to entertain in his two terms as FED chair. This week, Powell gave what will probably be his last press conference as FED chairman. He will, likely, be replaced in mid-May, by Kevin Warsh. A final Senate vote is pending. Like Powell, Mr. Warsh will be a Trump pick. Powell came to power, as chair, in February 2018 and was renominated for a second term by POTUS Biden. That Powell had to deal with Trump twice… garnered Powell a lot of well-earned respect and support from FED watchers and many on Wall Street. And I have to admit, a long time Powell critic, found myself cheering on Mr. Powell this last year and four months. Seems that Trump isn’t content with his current job but wants to be the most powerful man in the world as well, Federal Reserve chairman… by all appearances, so Trump and congress can spend like a drunken sailor on tax cuts, corporate welfare, empire, war, genocides, and violence for Bibi and billionaire supporters. And ultimately, destroy the U.S. dollar.
Trump certainly does appear to be on a mission to destroy the United States but I digress. Today, I don’t want to spend a lot of time on Mr. Powell. However, it’s very much worth noting the national debt was an eye popping $21 trillion when he came to power in 2018… today, we are told the debt to GDP ratio is 100% with the national debt at $39 trillion. I’m always skeptical on the national debt number, given that the United States printed up eight to nine trillion from 2008 to the present day in the form of debt and securities monetization (fancy words for bailout). The purchase of treasuries and various securities in a process known of quantitative easing. There’s also the matter of Trump & Powell bailing out Wall St in his first term with $4.5 trillion, that was created out of thin air. All kinds of monetary hocus pocus and magic going on… none of it good. So, the national debt nearly doubled under Powell.
To his credit Chair Powell has warned the congress about the national debt and the fact that its unsustainable; but congress being the recipient of the world’s fiat currency and seemingly endless money printing, so far, has taken no action in reining in the U.S. government’s spending and evil ways. The FED, by the way, is not required to fund the government’s debt and deficits… per the Treasury-Fed Accord of 1951, the FED could refuse to fund the U.S. government’s debt, deficits, empire, and wars (which explains why the FED isn’t a branch of government and is said to be independent).
BTW, this FED write up on the Treasury-FED Accord is fascinating history: where the FED was forced to peg interests rates low (the preference of POTUS Truman and all modern Presidents), monetize debt during WW2 and leading up to the Korean war to maintain the peg, inflation soared to 21%, and the FED finally forced the administration’s hand and it was agreed to let markets decide interest rates on U.S. Treasuries, at the longer end or tail end of the yield curve.
Alas, Mr. Powell did not take the hard line with members of Congress and put a halt to financing sky high deficits and debt. At the end of the day, my primary complaint with Mr. Powell, beyond debt & deficits, like Arthur Burns and the ‘70s before him, is that Powell presided over another lost decade, where inflation soared. Mr. Powell was slow to respond, viewed inflation as transitory, and when he did act Powell did not act aggressively enough. Many economists and pundits were also slow to pick up on the real reality, that easy money and resulting financialization had spawned a monopoly economy, that was key in creating supply-side driven inflation Americans have been faced with from COVID-Eve, January 2020 to the present day. In this regard, Mr. Powell will be remembered as the Arthur Burns of the 21st Century… a champion of Wall St financialization and greed (runway money printing, debt, and deficits) … and will not be remembered as the Greatest American that ever lived, Federal Reserve Chairman Paul Volcker. Paul Volcker, of course, defied Presidents, the rich, the powerful and Wall St and increased interest rates well into the double digits to crush 70s and early 80s runaway inflation. And ultimately lost his job to do what was correct, in the face of a Congress that was simply unwilling to take action or only acted with half, ineffective measures. Entirely typical of the institution and the gross incompetence the institution is known for, from 1789 to the present day.
With that said, I did want to bring up three key observations in regards central bank policy feeding financialization; the FED’s dual mandate and the incentive to game government statistics surrounding the dual mandate; and finally, the use of low-balled inflation figures to juice GDP and growth and thereby, utilize the results to stop or halt any discussion or efforts at economic and monetary policy reforms.
Financialization: Powell kept the easy money policies that have been place from Greenspan to the present day. Even today, with inflation rearing its ugly head again, Powell has set the FED funds rate at a highly accommodative 3.5 to 3.75%. These easy money policies favor Wall St, asset stability for the wealthy, private equity and venture capital, and financial engineering. Some economists have called financialization a misallocation of resources, resources & capital directed away from the real economy, and it’s been observed that financialization is a drag on the overall economy. And therefore, easy money and low cost of debt -- that feeds financialization and private equity -- are also a drag on the economy. Moreover, easy money proves to be a drag on the FED’s dual mandate: maximum employment and stable prices. Easy money feeds M&A and corporate consolidation, that is to say cartels and monopolies, with monopsony power. Easy money feeds leverage on corporate balance sheets and buybacks… leverage and debt that often leads to cost cuts and layoffs. Easy money therefore feeds the power of totalitarian monopolies and the private equity business model to dictate ever rising prices and crush labor and wages… in direct conflict with the FED’s and many central banks’ dual mandate. The FED therefore, can be said to be the key driver of inequality in the United States today.
The FED’s dual mandate and the incentive to game government statistics: If you tell Americans that core inflation and non-core inflation year over year are under 4%, they are likely to laugh in your face (albeit there would be no mirth in their laughter). The fact that gasoline is now 80% higher than when Trump left office, January 2021, is nowhere in the monthly BLS figures and reports. That U.S. healthcare insurance has increased by double digits in the last year alone, seems to be omitted or significantly discounted. The weighting of the BLS products and services also is subject to debate, as is the adjustment for “quality changes” that arbitrarily lower inflation figures and the rollup to the headline number. Skyrocketing auto costs and the interest rates charged as Americans take out essentially a mortgage to buy a car… these are examples that point out that the inflation numbers appear to be deliberately low-balled or certainly skewed lower, seemingly by design. And there’s moral hazard in place to do just that, isn’t there … including the continuation of central bank easy money policies, that feeds Wall Street greed and profits, extravagant CEO pay packages, unlock absurd sums for shareholder value, speculation, the casino, financialization, financial engineering, private equity and venture capital, M&A, monopoly, and monopsony. Which rolls full circle to the aforementioned deleterious impact on the dual mandate: maximum employment and stable prices. Here, the K-economy comes to mind… a dual track economy, government, judicial system, and regulatory system that works for the privileged, the few, and increasingly leaves the powerless, recently reported at 60% of the population, struggling for survival. Low-balled inflation has impacts on Social Security payments and COLA, which along with methodological shifts, say to a cost-of-living index, translate into lower inflation. (Without substitution bias, hedonic adjustments, geometric weighting, and the failure to consider alternative data and historical calculation methodologies an unflattering portrait of present inflation would arise).
Therefore, if inflation was correctly reported, the FED and central banks forced to take a much harder line, Wall St and financialization would take a massive hit… financial engineering would wither… and captains of industry and robber barons would actually be forced to place capital into the real economy again, that is, in many instances be forced to compete. Arguably, America’s decline can be traced, directly correlates with the offshoring of the real economy, the rise of easy money and financialization. And the rich and powerful have every incentive to keep it that way, with government capture and gamed statistics.
The gaming of statistical data to preserve a failed status quo and zero out discussion and debate on an abjectly failed economic model and monetary policy: The gaming of the inflation metrics not only helps to preserve ultra accommodative monetary policy in the service of Wall St, billionaires, financialization, and greed… but the lower inflation numbers help show improved or skewed real GDP and growth figures… to the keep up and prop up the mirage of a healthy economy. That GDP and growth are not good measures of economic success (see again, the aforementioned K-economy where 60% can’t cover their basic needs and further suffer with wage stagnation), and yet, are constantly leaned upon as proof positive of economic success, conveniently never enters public discourse. Like it or not these numbers, faulty as they are, are treated as sacrosanct. And here again, the moral hazard surrounding the inflation numbers transfers directly into the moral hazard surrounding inflation adjusted GDP and growth numbers that are gamed or at the minimum, skewed to the upside. (The fact that U.S. GDP is propped up by debts and deficits and endless war… and the resulting chaos unleashed upon the world… also never enters the discussion). If more realistic inflation figures were pared with GDP and growth figures … alas, GDP and growth might prove to be underwater, which would likely prove problematic for longer term Treasuries. Which could set off discussions on how dereg, financialization, globalization, neoliberalism, the necro-wartime economy… and political duopoly and the oligarchy the duopoly reports to… have failed the American people.
Neither the leaders of the management class… Dem and GOP party grandees,and the oligarchy they report to… are prepared to have that discussion. Best to keep the numbers rigged -- more sympathetically, adjusted with a smiley face -- to preserve a failed status quo?
At the end of the day, this all points to the complete lack of morality of maintaining an economy that fails and indentures… literally enslaves sixty percent of the public to debt… and the lengths those in power will go to, to maintain and perpetuate an economic model that is bankrupting the nation and has turned the United States into international pariah. See America’s dependence upon debt, deficits, central bank easy money, and a Wartime economy to keep up the mirage of a “healthy economy.” At the epicenter of it all lies central banks and the most powerful man in the world, the Federal Reserve chairman. No wonder Mr. Powell looks like he aged decades in the last year.
Copyright JM Hamilton Publishing 2026
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