What are the chances of Federal Reserve Chairman Jerome Powell being wrong? The chances he’ll be wrong on the economy’s growth prospects, the direction of the federal funds rate, and inflation itself? Our guess is his chances of being wrong are quite high.
What you see, unfolding before your very eyes, is a great exercise in futility. To this endeavor, the Federal Reserve has claimed central authority of the command center. The federal funds rate, the Fed’s balance sheet, economic stagnation, massive asset bubbles, and the limits of central planners are the topics of focus. Where to begin?
Powell got into the central banking business through uncommon means. To his credit, he’s not an economist. This is a great improvement over former Fed Chair, and intellectual ditherer, Janet Yellen. Like President Trump, we didn’t have the patience for her egghead PhD economist act.
Powell, on the other hand, is a lawyer turned investment banker. He didn’t spend his formative college years being indoctrinated at the church of Keynes. But that doesn’t mean his brain hasn’t been equally softened over. For Powell received an indoctrination of another sort – one that began the moment he inhaled his first breath.
You see, Powell’s a son of the Washington D.C. Imperial City. He was born and raised in D.C. and has lived nearly his entire life there. He knows how the nation’s capital works. Namely, that ever expanding debt levels are needed to keep the banks of the Potomac River firm enough to support its giant command and control money suck operation.
Singleness of Purpose
Several years ago, as visiting scholar at the Bipartisan Policy Center, a D.C. think tank, Powell tirelessly worked for an annual salary of $1. Behind the scenes, he labored with a singleness of purpose to persuade members of Congress – one-by-one – to raise the debt ceiling.
President Obama rewarded Powell with a nomination to the Federal Reserve Board of Governors. President Trump, an ardent proponent of debt without limits, took a quick liking to Powell. He cut Yellen loose the first chance he got.
