This is Jerome Powell’s America.
As chair of the Federal Reserve’s Board of Governor’s, he manipulates the United States economy towards the outcome he thinks correct.
As the board’s website puts it…
The Board of Governors, the Federal Reserve Banks, and the Federal Open Market Committee work together to promote the health of the U.S. economy and the stability of the U.S. financial system.
— Federal Reserve Board – The Fed Explained
Even though they print our money and control our economy, the Federal Reserve remains a ‘government affiliated’ agency rather than being a formal part of the federal government. In large measure, the fed’s board of governors are self-governing not answerable to anyone for their everyday actions.
Of course, an economic engine chugging along with trillions of dollars never lends itself to tight control. Pesky things like a pandemic, the Russian invasion of Ukraine and a thousand other unexpected events throw gravel and boulders in the path of fed policy.
Still, Powell and his crew get to play God.
Right now the fed chair deems that controlling inflation by strangling the money supply must be correct. By raising or lowering the interest rate the federal reserve uses in a very limited number of transactions with banks, the board of governors moves the rates within the entire banking industry. Again this week, the Powell cartel pushed up their rate by three-quarters of one percent. That may not sound like much, but, with other rate jumps in recent months (and probably increases into 2023) these increases make home and car loans more expensive, surge credit card rates before Holiday shopping and otherwise siphon a lot of money out of the economy. That could lessen inflation.
Yet, this impacts more than money. You see, Jerome Powell doesn’t care if you lose your job or your kids don’t get enough to eat. We are expendable.
As an avalanche of press reports note, to push inflation down to his target of 2% per year (it’s currently around 8%) Powell promotes actions known to cause lay-offs. The media suggests that Powell will tolerate the unemployment rate hopping from the current 3.7% to 5%, 6% or perhaps a nudge below 7%. He deals in numbers. The loss of 10 million jobs – meaning close to 10 million more struggling families – won’t keep him up at night.
Remember the financial meltdown from 2007 to 2009?
The Federal Reserve responded aggressively to the financial crisis that emerged in the summer of 2007, including the implementation of a number of programs designed to support the liquidity of financial institutions and foster improved conditions in financial markets. www.federalreserve.gov
In other words, they saved the bankers while workers got stiffed. That’s what Powell and the federal reserve do.
Perhaps we could have the President who appoints and the Senate which confirms the federal reserve chair require them to spend one week a month working in a food pantry, at a school in a working class area or an unemployment office.
I know, that won’t happen. Jerome Powell is too important to see the suffering he causes.
Glenn Koenen
Photo by Karolina Grabowska: https://www.pexels.com/photo/heap-of-different-nominal-per-dollars-4386442/