by Tom Beck, via Activist Post:
I’ve spent hours listening to Jerome Powell’s testimony before Congress, which included some incredible revelations. For one, some members of Congress are so clueless that it hurts me to see them clogging the airwaves and even addressing Chairman Powell with issues that the FED has either no authority over or minimal expertise in. One particular instance was when one of them remarked on LIBRA, thinking it is actually LIBOR.
Powell made some very important comments, as did several of the more sophisticated Congressmen and women, who asked him about (1) the national debt, (2) income inequality, (3) the gold standard, (4) unemployment levels, (5) inflationary expectations, and a wide range of critical subjects.
One comment that struck me as unique is that Powell acknowledged that the dollar is the world’s reserve currency – and as such, we can, will, and should continue to issue more and more of it, without fearing the consequences in the near-term. However, there is ultimately a huge price to be paid.
This comment totally ignores the fact that other countries are de-dollarizing, which could accelerate and dethrone the USD far sooner than Powell believes, to which Powell addressed that Japan is issuing massive amounts of new currency units, without the blowback of inflation, but he, again, ignored the fact that it is mostly financed by domestic lenders, not foreign ones.
Secondly, Powell rightly talked about the fact that while the Federal Reserve is in charge of reaching maximum employment and price stability, they really need supportive government policies to achieve that. Washington, for example, has to find ways to incentivize corporations to train employees, who are on the sidelines, find daycare solutions for single moms and commuting solutions for those that lack the ability to get to the workplace.
For now, what we know is that the FED has lowered their neutral rates to 0.5% in real terms, which means that the FED will cut rates at the end of July, unless a miracle happens.
The FED is worried about events happening in other countries as well and how they affect price stability and employment in the U.S., such as Brexit.
Powell did get a question from a gold hater, who asked him whether or not we should return to the gold standard. His reply was a mixture of bullshit and lies. He first said NO, and then justified it by saying that by maintaining a gold standard for the dollar, the FED could not make sure that prices remain stable and unemployment remains maximized.
He then said that ALL countries abandoned it decades ago, because it’s volatile.
What a load of BS!
For one, Nixon took the dollar off the gold standard; this forced other countries, which were on the $35/ounce redeemable illusion, to retain their dollars and give up on gold. Secondly, he is outright lying when saying that gold is volatile. GOLD is fixed, while the value of fiat currencies changes and affects gold’s price.