Are Joe Biden and the Democrats anticipating a Red Wave/Blue Crush in the 2022 mid-term elections this November? The White House has already begun compiling a list of excuses for a potential blowout, beginning with the electoral contest being illegitimate. But now the president is adding another scapegoat for the ousting of the donkeys in Washington: Jerome Powell and the Federal Reserve. So much for the central bank being an independent institution and Biden fighting inflation.
Blame the Fed
Jerome Powell (Photo by Brendan Smialowski-Pool/Getty Images)
Like Hillary Clinton’s never-ending list of reasons she lost the 2016 election, Biden is perhaps typing out a document that highlights why the Democrats may lose in a few months. And, like the woman who will never be president, he is refusing to take responsibility for everything that has gone wrong in the United States in his first year as commander-in-chief.
Despite conveying confidence in Powell, Biden pre-emptively assigned blame to the central bank for potentially losing the House and Senate to the GOP. He reaffirmed the entity’s mandate of preventing higher prices from becoming ensconced in the post-crisis economy lies with the Eccles Building.
“The critical job of making sure elevated prices don’t become entrenched rests with the Federal Reserve, which has a dual mandate: full employment and stable prices,” Biden said during a recent press conference. “The Federal Reserve provided extraordinary support during the crisis for the previous year and a half. I respect the Fed’s — the Fed’s independence.”
In other words, if stable prices do not happen this year, it will be Powell’s fault – not Biden’s. Eric Peters, CIO of One River Asset Management, recently quipped:
“Such is the precarious state of financial markets that their prices are falling sharply because the Fed is verbally tightening, even as it is still actually easing. And Powell quietly wondered what his new boss would demand he do, if markets were to plunge, while inflation remains near 40-year highs.”
An Inside Joke
For the last year, the inside joke had been that inflation is transitory. Powell and Treasury Secretary Janet Yellen dropped the charade and conceded they were wrong: Inflation is hot and here to stay. But in the good old days of pre-2020, one of the worst-kept secrets in the Swamp had been the Federal Reserve’s supposed independence. The central bank has not been independent since before the Great Depression, and it is another political tool of the executive and legislative branches, wielded by the party in power.
During the 2016 presidential election, former President Donald Trump echoed the sentiments of Austrian economists and libertarians everywhere: The Fed is a partisan group that coordinates monetary policy with fiscal affairs in the nation’s capital. From Marriner Eccles and President Franklin Delano Roosevelt to Arthur Burns and President Richard Nixon and on to Alan Greenspan and Bill Clinton, every Federal Reserve chair and U.S. president works together. As economist and historian Thomas DiLorenzo noted:
“The Fed operates for the benefit of its executive branch controllers, the banking industry, and Fed employees themselves, at the expense of the rest of society which suffers from the economic instability it creates. Worse yet, many Americans have been conned into believing that the Fed Chairman operates like the Wizard of Oz, hiding behind dark curtains, pulling levers and pushing buttons to make the economy operate smoothly. So-called ‘scientific socialism’ may have been the most absurd and destructive idea of the twentieth century, but it is nevertheless the guiding ideology of central banking.”
The Fed dropped the ball on inflation with its absurd transitory talk, whether out of ignorance or mendacity. Anyone who possesses a modicum of common sense can see that printing $8 trillion out of thin air would emit inflation into the atmosphere, resulting in unaffordable spending bills and an everything bubble in the stock market that will crash the economy. And, of course, when the inevitable downturn happens, it is rinse and repeat in the halls of Congress and the Eccles Building.
Why Not?
Sure, the Eccles Building is the primary culprit for inflation trending at its highest level since June 1982. The central bank has produced one-third of all U.S. dollars ever printed in the nation’s history. It has artificially slashed interest rates to historic lows while monetizing the debt and injecting the financial markets with astronomical amounts of liquidity. Republicans can play the political game of lamenting on the administration’s outlandish spending sprees, but the Fed is the source of enabling all these reckless deficit-financed bills and budgets time and again.
~ Read more from Andrew Moran.
