How the Fed Chairman Is Shielding It From Trump

For a good part of 2018, I really thought that Fed Chair Powell was a truly rational and independent thinker bound to the course of normalizing monetary policy (by increasing rates and shrinking the Fed balance sheet) that had remained in a stimulative mode for far too long. The blistering attacks on Powell by the policy-ignorant president only bolstered that view. Wall Street keeps telling us how strong the economy is but this is apparently true only so long as we perpetuate economic crisis level monetary policy. And, if Wall Street senses any notion toward policy normalization, well, there's going to be a tantrum. And indeed, in December 2018, the stock market had a substantial sell off in response to the idea that Powell might actually keep those rate increases going (at the blistering rate of 0.25% every few months). Powell quickly reversed course, cutting rates three times in 2019 and re-inflating the Fed balance sheet by over $400B in a few short months in late 2019/early 2020 with its "not QE" repo operations. Chair Powell has made it clear that, going forward, monetary policy has nothing much to do with the actual mom and pop economy but instead is designed for continual replenishment of Wall Street's punch bowl. As for the resultant gross distortions in stock prices, house prices, and historically low unemployment that is magically accompanied by feeble wage inflation, well, we can send a big thank you to the Fed for keeping that party going.

Mr. Powell is walking a tightrope between Trump and the economy and a very thin one at that. If interest rates are too low, we risk both inflation and a lack of adequate room to deal with by cutting rates. Mr. Powell may not be an economist, but neither is Mr. Trump, who simply wants to claim a great economy before the election. The stock market has done well, but is the economy really great when so many people have to work two or three jobs without benefits to make ends meet?

Why would any competent professional accept any position the Federal Reserve in the Trump Organization/ Trump Administration Mar-a-Lago/ White House that is economically and politically beholden to Moscow, Riyadh and Tel Aviv? Since economics is not a science and economists aren't scientists not having a degree in that field is no impediment to being Fed Chairman. There are too many variables and unknowns to craft the double-blind/ randomized experimental controlled tests that provide predictable and repeatable results that are the essence of science.

Chair Powell should work with other central bankers to end the extraordinary experiment.He shoudl sell longer term treasuries to steepen the curve.Businesses and governments need to be curbed in their borrowings to avoid exacerbating the next downturn. The fall in the stock market needs to occur sooner rather than later.The need for dollars will end should its use as a reserve currency decline.Then the government deficit will bite hard.

I'm impressed with Powell, but the story misses the important point that we have wrung about everything that we can out of monetary policy. Long overdue is a massive reworking of fiscal policy--higher taxes and reduced spending. We must demand more from our elected leaders, not the impossible from an appointed technician.

Meanwhile, back in trickle-down fraudonomics reality, the Congressional Budget Office predicted on Tuesday that the United States deficit will top $1 trillion annually over the next 10 years, ultimately reaching $1.7 trillion in 2030.....thanks to collapsed federal tax rates and the eternal need for Republicans to paint the toenails of the rich in gold. By 2030, the C.B.O. projected, federal debt held by the public will surpass $31 trillion — about 98 percent of the forecast size of the nation’s economy. The federal budget deficit already hit $1 trillion last year — the first calendar year since 2012 that the gap between revenue and spending topped the trillion-dollar mark. We’re running trillion-dollar deficits while the economy is expanding. You're only supposed to run a deficit when the economy is contracting, but thanks to reckless Republican greed, there are trillion-dollar annual deficits as far as the eye can see. The Republican Party is driving this country over a giant cliff of debt by the King of Debt, Donald Trump and his GOP sycophants. The Fed will not be saving us from this manmade disaster.

"Yet Mr. Powell also has reason to make it clear that the Fed is focused on working Americans." Keeping interest rates low favors the investor class. Only half of America have any money to invest in the stock market. Many Americans are just trying to keep their heads above water. I don't see how the Fed is focused on working Americans.

Wall Street screamed to high heaven about the last interest rate hike. The US has raised the national debt by a trillion dollars this year, but Trump and Wall Street need low interest rates to keep the stock market steaming along. When the economy is growing the national debt should come down but the huge tax cut passed by the GOP has eaten away at any increase in taxes collected. The surprising thing is that economic growth has been modest. But unsurprisingly it almost entirely favored the investor class.

From GHIN.com it looks like Jay Powell of the Chevy Chase Club is a 9.8 handicap. You need to be able to putt to carry that handicap.

Hey Jerome! You virtuous granola eater & dog lover! Can ya help a saver out? Ignore those whiny crybabies on Wall St and raise rates. I know they are doing God's work, churning zombie debt, buying back their own stocks, & sucking equity out of assorted companies. And they deserve their private jets, contemporary art and whatnot. They're so smart & pretty. But my modest saving's annual interest couldn't buy me a nice steak dinner. And my state and town are raising my taxes because they're not getting decent returns on their pensions. Hey, I know: it's hard to taper a ponzi. I get it. And you like keeping your friends happy. But it's high time someone put on their Big Boy pants and dialed this thing back a bit.

The Fed is keeping rates low to prop up the stock market. Once again, we see that the primary role of government is to funnel money to the already-wealthy, without regard for future economic disasters that we KNOW will happen at some point. The Fed chief's actions are the opposite of conservatism, and entirely lacking in common sense or modern economic principles. This article seems to imply that Powell is something other than Trump's puppet. The facts surrounding our ridiculously low interest rates do not support that contention.

For decades, economists and government agencies said 5% unemployment was full employment. How and why was that figure abandoned? In this article, I saw nothing, not a word, about the practicalities that interfere with people getting jobs, and I mean jobs like dishwashing and stocking, not necessarily tech jobs. In vain, I looked for detail about: Transportation for unemployed people to get to the places where jobs are available, when they don't have a car and live away from the bus line. How unemployed people can access East Hartford CONNects's web site when there's no computer or internet available. How unemployed people can manage increasingly common split shifts and also manage child care or elder care responsibilities. How do some unemployed people with high blood pressure or the chronic pain of untreated arthritis find the stamina to work? How do they get medical care and medications, especially in states that refuse to fund 10% of Medicaid costs under the ACA. How people with mental health issues can work when they lack access to counseling and medication. How homeless people can be made fit to hold jobs. Overall, I appreciate FRB Chairman Powell touring East Hartford and taking notes about the experience. However, I see little evidence in this article and its links that practical obstacles to employment are being dealt with.

It sounds to me that Mr. Powell understands the reality of the llfe of an ordinary American. The low un-employment rate has not translated into more consumerism. The deficit is because of the Tax Reform Bill, not because millions of ordinary people are causing this to happen. It is the lackeys in Congress, Trump and his Administration who are responsible for the rise in the deficit. I am glad that Mr. Powell understands and uses plain language that we can understand. Most Economists have their collective heads in the clouds. Economic theory has not translated into reality. And if you want to point out that the stock market gets the jitters, you might also point out that it is usually twitters and events connected with Trump's machinations, not so much the Federal Reserve anymore.

We are at the equivalent of late 2007. The Fed has given up most of its ammunition. The deficit is back up to record levels. We have been acting as if still in a severe recession. The slightest dip in employment will trigger a spike (already at record level) in auto loan defaults and a pullback in consumer spending. A pullback already affected by virus panic. Boom. The reality of huge corporate debts will start to be revealed. Nowhere to hide.

we see how controversial the Fed remains in politics..Let us remember that up to about 1890, financial crashes were very common, as were bailouts by the super-rich.. A few observed europes use of central banks for stability and eventualluy America imitated them. We can see why we need the Fed. If we let politicians manage our countrys money we would have a depression at least every 8 yrs

Why does Trump rant about lowering interest rates when most economists worry about a recession? One possibility: He has huge loans with Deutsche Bank that will benefit from lower rates. Once more, it's all about Trump's business, not about America's financial stability. What's good for Trump is rarely good for our country.

Why does our booming economy need QE nightly?

Why does Trump rant about lowering interest rates when most economists worry about a recession? One possibility: He has huge loans with Deutsche Bank that will benefit from lower rates. Once more, it's all about Trump's business, not about America's financial stability. What's good for Trump is not necessarily what's good for America.

Why does Trump rant about lowering interest rates when most economists worry about a recession? One possibility: He has huge loans with Deutsche Bank that will benefit from lower rates. Once more, it's all about Trump's business, not about America's financial stability. What's good for Trump is not necessarily what's good for America.

My concern - though hard to substantiate in light of Powell's reticence - is that he is waiting for a Democratic administration to suddenly get worried about inflation, budget deficits, the national debt, and the like.

It is apparent by now that Powell is just another Trump lap dog. By purchasing $60Billion/month in Quantitative easing, when the stock market is at an all time high, he is fueling false positive economic expectations that lift voters confidence in the president and make them more inclined to vote for him. In other words, Powell is doing more to get Trump re-elected than Russia.

I would also like some explanation to the fed infusing cash into the economy at rates lower than what big banks are willing to accept. If a big bank will not relinquish cash or cash equivalents at 1.5%, why does the fed think they need to step in and do it? It was these repurchase agreements that initiated the crash in 2008 as everyone was participating in arbitrage activities, what is different today when big banks can borrow at rates of 1.0 -1.5% from the fed but will not accept less than 6 - 8% when lending money to each other. This is nothing but encouraging the big banks to take the money and re-invest in higher yielding investments. Great for the banks, but terrible for us who are on the hook for the Treasury Securities.

But when is the Fed going to level with politicians and the public that living off borrowing from the future cannot go on? How can the Fed keep saying the economy is basically sound when we are racking up a deficit and debt?

What about the billions injected into the repo market to keep this debt bubble afloat? Last one to the tune of over 80 Billion which stopped markets falling into a correction this week. They are not interested in mainstreet, only prolonging over inflated asset bubbles. 3 billion is added to the national debt including interest every day, how about letting the market be free to have a regular normal boom/bust business cycle again? Mr. Powell, this is QE Redux for the sake of proping up markets at any cost including our future awashed electronic conjured-up debt!

1) Stupid is as stupid does. Trump runs his mouth. Powell responds appropriately: 'The Fed chair said nothing." 2) " ... the Fed was more concerned with offsetting inflation than with fostering stronger growth and higher wages." Wages have not kept up with inflation or productivity growth since the '80s, at least. With stagnant wages, inflation is by far the more serious threat to the average Joe. Powell's responsibility is not just to the bonuses of Wall Street moguls.

This article reminds me of the cheerleading that the Media and the Analysts did for Alan Greenspan when they used to call him the Maestro. Alan Greenspan thought his job was pleasing everyone all the time and the brokers on commission, Politicians looking at the next election and the media were happy to oblige. Eventually Greenspan was blamed for the Dotcom bust and the Housing bust and left with his reputation in tatters. Powell is displaying similar hubris and lack of spine. A generation will pay the price for his blunders.