Want to guess who Federal Reserve Chairman Jerome Powell is going as for Halloween? Based on his most recent speech on the economy, it’s got to be the Grim Reaper.
Even as reports continue to show the economy recovering pretty quickly following the government-mandated shutdown of the spring and summer – which several of his Federal Reserve colleagues have cited – Powell continues to paint the direst picture of the American economy. However, this time, he has gone beyond the bounds of the Fed’s independence, publicly politicking for a new federal fiscal stimulus package. If one doesn’t arrive soon, he warned, it will be “tragic” and “lead to a weak recovery, creating unnecessary hardship.”
“The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods,” Powell said in a speech last week to the National Association for Business Economics.
I had been under the impression that the Fed was supposed to be “independent” of the government, or at least that’s what we were told repeatedly when President Trump went off on Powell for not doing what he wanted. However, it seems to be ok if Powell cedes that independence voluntarily and takes sides on a political debate.
This isn’t so much an example of charter creep, which just about every government agency and leader does, as much as a charter leap, with the Fed not only taking over more and more of the economy and financial markets but publicly lobbying for government action to make it so. Continue reading "Federal Reserve: Trick or Treat"