Powell’s Love Letter to Biden

“Please Reappoint Me” Were you forwarded this email? [Sign-up to The Daily Reckoning here.]( [Unsubscribe]( [Daily Reckoning] Powell’s Love Letter to Biden - A massive jobs “miss”… - Money for nothing, then worth nothing… - The Fed only has one blunt tool… Recommended Link [This man just revealed a $6.6 trillion secret]( [Read more here...]( This man recently blew the lid off a growing international conflict that’s already moving $6.6 trillion a day. Yes, trillion… Every. Single. Day. More importantly — [he revealed his proprietary secret]( for profiting from this massive daily flow of capital. If you want in, you need to [click here now.]( [Click Here To Learn More]( Somewhere in the Lower 48 States September 3, 2021 Editor’s note: The Federal Reserve recently held its annual Jackson Hole meeting (remotely). Today, libertarian writer Jeffrey Tucker cuts through the “officialspeak” and breaks down Jerome Powell’s speech for you. [Jeffrey Tucker]Dear Reader, I guess you can forget about the Fed “tapering” anytime soon. Today’s jobs report was a massive miss. The consensus estimate was 725,000 jobs, but the economy only added 235,000 jobs in August. At the founding of the Fed in 1913, there were two big pitches. Number one: The Fed would be independent of politics. They said this would be essential because the government has long abused the money and banking system to enrich itself. The Fed would be apolitical, they promised. Oh, plus, it would be decentralized with offices all over the country so that Washington alone would not rule. This would not be a national bank! Number two: It would stop inflation and other forms of instability. Sound money would rule the day! That was a century and eight years ago. Nothing of those early promises panned out. The Fed has been hyper-political even from its opening. It’s unlikely that the U.S. would ever have entered the Great War (WWI) without the Fed’s promise to back U.S. debt with the power to create new money out of thin air. As for inflation, we know the story there — all too well. In this sense, Jerome Powell’s much-anticipated speech, associated with Jackson Hole, Wyoming, where they did not physically gather due to the virus (Delta, don’t you know!), was revealing. Powell Pleas for His Job His speech was nothing if not obsequious. He offered not one word of criticism of the current fiscal policy, even though it is insane by any definition of the term. He also failed to point out that the existing labor dislocations are mostly caused by ridiculous federal sloth subsidies. No, hinting that the Biden administration might be lacking in the perfection department could be dangerous. Instead, Powell offered up a job application. Yes, he said, the Fed would tamp down on its bond purchases, but it would not reduce its balance sheet. Nor will it raise interest rates. Nor is it particularly worried about inflation because all that we’ve seen so far, he opined, is related to the pandemic and the opening. It’s transitory. It will be gone before you know it, except that we’ve heard that for many months, and it keeps not being gone. It keeps getting worse and creeping around in weird ways (shrinkflation, housing-price explosion, frothy financials). As proof that this is not really inflation, Powell pointed to “The absence so far of broad-based inflation pressures.” But here is the problem. No inflation in world history has hit every sector evenly. It starts somewhere, spreads somewhere else, and only gradually affects nearly everything. The idea of a price level rising like the sea is purely a statistical archetype of economic modeling. It has nothing to do with reality. You see, Powell is faced with getting re-nominated. This speech was a pitch to keep his job. The people in the Biden administration, to the extent they have any economic theory at all, are wedded to a view (sometimes dubbed Modern Monetary Theory) that the Fed has magic powers to improve everyone’s life at essentially zero cost. All they have to do is keep the spigots open. Powell is not a stupid man; he is a very savvy politician, one you did not elect but one who believes in his awesome powers. Recommended Link [World’s 1st Billionaire “Super Alliance” = 1 New Disruptive Technology]( [Read more here...]( Together, they’ve joined forces… And created a “super-alliance” of billionaire investors… To claim a ground floor stake in a new disruptive technology… That Bloomberg says will grow 12,100% over the coming years… And potentially overturn $100 trillion in economic assets. What do the ultra-rich know that everyday Americans like YOU don’t? [Find out here.]( [Click Here To Learn More]( What Can the Fed Do? The office of the Fed has long been infused with a kind of mystical reputation. It’s deserved only in part. After all, the Fed can legally do what you and I would be convicted in criminal court for doing, namely, counterfeiting via the power to create money out of nothing. It’s an odd thing about governments generally; they are entitled and adored for exercising powers that would otherwise be considered unethical, intolerable and prosecutable if the same were done by private citizens. And for this, its agents are adored and revered. The Fed indeed has tremendous powers to do tremendously bad things. But what about its powers to reverse course? Here the problems are both technical and political. Technically, it is not easy to stop inflation once it kicks into gear. Rising prices are not dictated by the Fed; they are a consequence of specific decisions among producers and consumers in response to a flood of new cash hitting the streets. Those decisions, in turn, are influenced by psychological expectations of the public, over which the Fed has little control. Money for Nothing, Then Worth Nothing Many economists and commentators are playing it safe right now, refusing to sound the alarm of some impending inflationary disaster. This is because we’ve not seen such a thing in 40 years, despite very reckless Fed policies in 2000 and 2008. As a result, many pundits have lost confidence in their own ability to discern a predictable relationship between monetary aggregates and price instability. And yet it’s best to take a step back and look at what’s happened to us over 18 months. The country nearly shut down completely, and the Fed attempted the impossible: to provide a full substitute for a functioning economy. Congress got in on the act and shelled out trillions by dropping stolen and/or inflated money into everyone’s bank accounts. That money is now hot on the street, pushing up prices of everything. The sheer frivolity of spending today is everywhere on display. Powell’s own speech hints at the absurdity: In a reversal of typical patterns in a downturn, aggregate personal income rose rather than fell, and households massively shifted their spending from services to manufactured goods. Booming demand for goods and the strength and speed of the reopening have led to shortages and bottlenecks, leaving the COVID-constrained supply side unable to keep up. How can you experience the worst economic crisis in more than a century and have that followed by an incredible spending spree? That’s pure alchemy, courtesy of the Federal Reserve. It’s an impossible illusion. Unsurprisingly, Powell left this out of his address. And I guarantee you the following... If this inflation keeps up and worsens, everyone who is currently on the sidelines will step up and claim that they predicted this from the beginning; indeed, it was inevitable. Here is another reaction I had reading Powell’s speech: For a man who thinks inflation is no big deal and on its way out, he sure does talk about it a lot! Recommended Link [George Gilder: “5G will soon be exposed as hype and hustle.”]( [Read more here...]( Gilder believes a radical paradigm change is taking place in the tech world – one that could disrupt the existing 5G industry. It isn’t the first time he’s shocked the tech world… Gilder predicted the smartphone in 1991… identified Amazon in 1998, before it rose 243,000% over 23 years… and helped his followers make 40x their money in less than four years on Qualcom in the late 1990s. Now he’s at it again… [get his full prediction here.]( [Click Here To Learn More]( The Fed Will Not Do This The Fed has one really blunt tool in its tool box: It can raise interests as they pertain to lending within the banking system. The trouble here is that this can panic markets, kick off selling among financials, dramatically raise the cost of debt service by the government and tamp down lending and borrowing in the private sector. During an unsustainable boom, it is a wise move, one that looks to create the ground for a future of sustainable prosperity. The last time we saw that level of courage deployed by the Fed was half a century ago. It’s been a very long time since we’ve seen wise, far-seeing and bold leadership of this sort at any level of government. The current fashion is for doing whatever it takes to survive, for now. And the Democrats are in survival mode right now. The president’s popularity is falling dramatically, and we are already seeing suppressed public anger appear in wild ways that the ruling class has tried to prevent. All of this public fury today would be present even in the absence of continued inflationary pressure that outpaces wages and productivity. If that happens and worsens, we will be out of historical comparisons. We are only left with metaphors involving timbers, gasoline and matches. We would be in the realm of unpredictable madness. Jerome Powell may rue the day he worked so hard for his reappointment. Regards, Jeffrey Tucker for The Daily Reckoning Editor’s note: From Southern California to New York City… strange [“white cubes”]( are cropping up all across the country. They were even spotted 125 feet from a suburban neighborhood in southeast Texas. Have you seen them? [Click here for more...]( It’s not a 5G device or a “mysterious” alien technology. But according to our colleague’s research… [These strange “white cubes” are coming to a neighborhood near YOU.]( What’s going on here? [Go here now to see the wild story on these strange “white cubes” BEFORE they land in YOUR backyard.]( --------------------------------------------------------------- Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Jeffrey Tucker]( is an independent editorial consultant who served as Editorial Director for the American Institute for Economic Research. He is the author of many thousands of articles in the scholarly and popular press and eight books in 5 languages, most recently Liberty or Lockdown. He speaks widely on topics of economics, technology, social philosophy, and culture. Add feedback@dailyreckoning.com to your address book: [Whitelist us]( Additional Articles & Commentary: [Daily Reckoning Website]( Join the conversation! Follow us on social media: [Facebook]( [LinkedIn]( [Twitter]( [RSS Feed]( [YouTube]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press delivering daily email issues and advertisements. 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