PrintJuly 3, 2022
Jerome Powell and Janet Yellen should be fired
Janet Yellen and Jerome Powell are supposed to be economic experts yet they continue to show their pure ignorance on what causes inflation or when it will occur.
One is the Treasury Secretary, the other is the Chairman of the Board of the Federal Reserve. But neither knows beans about inflation, which is why we have so much of it.
The Federal Reserve has two jobs: Watching unemployment and controlling inflation, but Powell said he really doesn't understand what caused the current inflation. He's a fan of the junk economic thought known as "Modern Monetary Theory" and it shows.
Before we ended up with the inflation we see today, Yellen and Powell repeatedly claimed that inflation was transitory and so their delayed actions to put a stop to it compounded the problem. Powell kept interest rates artificially low for too long, which punished savers and pushed investors into chasing the prices of other assets such as stocks, bonds, real estate, and artificially created assets like cryptocurrencies.
This week, Powell blamed inflation on the unvaccinated. I'm not kidding. That is pure B.S and exactly what a politician pushing an agenda would say:
What did we get wrong? And that really was looking at these supply-side issues and believing that they would be resolved relatively quickly.
By that I mean there were gonna be vaccinations — everyone would get vaccinated — so the millions of people who dropped out of the labor force would come right back in, so wages wouldn’t be under such pressure. That didn’t happen.
Besides the artificially low interest rates that caused asset prices to spike, the Federal Reserve printed massive amounts of money to support the government's profligate spending on COVID handouts, paying people not to work among other wasteful schemes, and that caused demand to go up, which brought us classic demand-pull inflation.
Lower down on the economic production hierarchy, below the inflationary surge of money, we have Biden's disastrous energy policies which caused energy prices to spike, because energy is priced in dollars -- worldwide. Throughout the presidential campaign and throughout his term in office Joe Biden has stated one of his primary goals was to destroy the fossil fuel industry. That sent the message to traders, speculators, OPEC, Russia, and others that the U.S would not be a competitor any more and prices soared. Energy prices affect huge swaths of the economy and inflation spiked further, as if the Fed's monetary print-fest weren't enough. It doesn't take an "expert" to recognize that, but somehow Yellen, Powell, economists and people pretending to be journalists won't admit the obvious.
As energy prices, food, asset prices, rents, and everything else spikes, we have a classic case of cost-push inflation where money is transferred (or redistributed) from one sector to another, which harms everyone, especially the poor, middle class, and small businesses.
As the price of everything goes up, workers naturally demand higher wages and we get into a disastrous inflation spiral.
Biden and his people say they are doing everything to lower inflation and energy prices, but that is a lie. All we have to do is look back to 2008 and then-President George W. Bush to see how to lower energy prices.
The price of crude went above $140 a barrel and gasoline was over $4 per gallon at the pump in July 2008. Disposable income was decimated. Bush opened up drilling (Drill, baby drill!), and by January 2009, when Barack Obama and Joe Biden took office, the price of crude was around $40 a barrel and gasoline was under $2 per gallon.
That move alone, begining with just the talk of it, contributed greatly to the economic recovery that followed.
Of course Biden won't do that and his administration, including Powell and Yellen won't suggest that he does because the extremist green agenda is their primary goal, not inflation.
It is pathetic that Biden, Powell, Yellen, and others continue to regurgitate that the economy is strong and the balance sheets of voters are strong. They continue to say they can't see a recession. Nothing could be further from the truth.
In the first quarter, the economy shrunk 1.6%, and the second quarter may barely eke out a gain if they are lucky, but many economists are forecasting worse. The public, especially the poor, the middle class, and the small businesses feel like they are in a recession.
Eventually, the slow economy will yield statistically lower inflation rates but if energy prices remain near today's levels the economy will be in trouble for a long time.
Image: Federal Reserve, via Flickr // public domain
