Tuesday, April 3, 2018

Steve Forbes Blasts New Fed Chairman Jay Powell

Jay Powell, money printer

Steve Forbes in the April 30, 2018 issue of Forbes nails it:
The New Head Of The Federal Reserve, Unfortunately, Is A Disappointment
THE FEDERAL RESERVE'S new chairman, Jerome Powell, recently presided over his first meeting of the Federal Open Market Committee, which sets central bank policy, most particularly the level of interest rates. Powell looks to continue the same destructive policy that has done so much harm to the economy.

The episode underscores that our central bank won't rid itself anytime soon of its three fatal flaws:

--The belief in funny money, that is, an unstable dollar. The Fed never resists when the Treasury Department wants a weaker greenback, as happened in the early 2000s under President George W. Bush. No country does well with wobbly money. Our feeble dollar was the foundation of the disasters of 2008–2009. A floating currency is as helpful as a watch or clock that can't keep proper time. It harms long-term investing, the crucial key to a higher standard of living.

--The bogus theory that prosperity causes inflation. One newspaper commentator--reflecting the predominant thinking--said Powell faces the tricky task of increasing unemployment while avoiding a recession. This fake holy writ comes from the long-discredited Phillips Curve, which posits that if you want low inflation, you must have higher unemployment, and conversely, if officials desire more employment, they must engineer more inflation by undermining the value of the currency. Hence all the jabber about trying to achieve an inflation rate of 2%.

Read the rest here.

1 comment:

  1. Isn't Forbes the one who believes that the value of the dollar should be "stable" (and heaven knows how he would measure that)? Not only doesn't he want a weaker dollar, he doesn't want a stronger dollar either (and would propose manipulating the money supply to keep the value "stable"). But if, per the Austrian view, we had a fixed money supply and an increasing supply of products, that would be great economic progress, even though the value of the dollar would be increasing (price deflation).