"Janet Yellen Powell Puts" On Some Pants And A Tie

by David Stockman, Lew Rockwell:

It can’t get any worse than this. Jerome Powell is a Wall Street-coddling Keynesian and Washington lifer who passes for a Janet Yellen replica – that is, save for his tie and trousers and his as yet underdeveloped capacity to whine pedantically.

During his years on the Fed since May 2012, Powell has voted approximately 44 times to drastically falsify interest rates and to recklessly and fraudulently monetize trillions of the public debt. That is, Powell has been all-in for a destructive central banking regime that is literally asphyxiating capitalist prosperity in America.

We will get to the latter in more detail momentarily, but just consider the plight of bank account savers during the 65 months “Jay” has served on the Federal Reserve Board. They have been continuously savaged by negative real interest rates averaging -1.8% per year. That cumulates to a 9% confiscation of inflation-adjusted principal during that five and one-half year period, but this purported Republican dissented not a single time.

And now he is being appointed Fed Chairman by a purported Republican President!

At this point, therefore, it can be well and truly said that Wall Street owns the nation’s central bank and that the Republican party has morphed into a gang of dutiful handmaidens. Any semblance of fidelity to sound money and free market capitalism – of the type, for instance, so brilliantly articulated by Treasury Secretary Bill Simon during Ford’s time and George Humphreys during the Eisenhower era – has been lost in the fog of history.

Not only did Republican presidents appoint the scourges of Greenspan and Bernanke, but the GOP standard bearers thereafter have essentially embraced more of the same monetary central planning. During the 2008 campaign, for example, Senator McCain’s chief economic advisory was Mark Zandi of Moody’s – a Fed sycophant and Keynesian “stimulus” devotee if there ever was one. And Mitt Romney’s top economic advisor in 2012 was professor R. Glenn Hubbard of Columbia, who averred at the time that Bernanke was doing a swell job.

Yes, we know that the Donald came to the Oval Office with a giant disability on the matter of sound money.

To wit, he claims to be a billionaire and perhaps is. But if so, it wasn’t owing to the genius and business acumen domiciled in Trump Tower; it was solely and completely due to the fact that the Donald’s 40-year career as a leveraged real estate developer was flattered beyond measure by the cheap debt and serial bubbles that have been the essence of central bank policy since Volcker was fired in 1987.

So we did take his campaign attack on the Fed’s “big, fat, ugly bubble” with several grains of salt, and knew that his self-characterization as a “low interest man” did not bode well for his approach to filling the raft of vacancies at the Fed.

Still, the choice of Powell is a shocker. This guy is so deep in the tank for the speculative classes and such a mechanical Keynesian that there is really no hope at all that the era of Bubble Finance will end – that is, voluntarily and without a thundering financial crash.

Indeed, Powell is so mired in Fed group think with respect to the ridiculous fixation on 2.00% inflation and the utterly discredited Phillips Curve and DSGE (dynamic stochastic general equilibrium) models that you might well think he was Charlie McCarthy to Janet Yellen’s Edgar Bergen.

Thus, in almost identical words to Yellen’s blathering at her last presser, Powell has been mystified by an alleged inflation shortfall and gums at will about too much slack in his bathtub model of the US economy:

“Inflation is a little bit below target, and it’s kind of a mystery,” he told CNBC in August. “You would have expected, given that we’re getting tighter labor markets, that we’d have a little higher inflation. I think that what that gives us is the ability to be patient.”

The relationship between slack and inflation has weakened substantially over the years,” Powell said in June 2016. “In addition, inflation depends importantly on the inflation expectations of workers and firms. A widely shared view among economists today is that, unlike during the 1970s, expectations are no longer heavily influenced by fluctuations in inflation, but are fairly constant, or anchored. For both these reasons, inflation has become less responsive to cyclical changes in the economy.”

“While inflation expectations seem to me to remain reasonably well anchored, it is essential that they remain so,” he said. “The only way to assure that anchoring is to achieve actual inflation of 2 percent, and I am strongly committed to that objective.”

Folks, that’s just the group think voodoo economics that has metastasized in the Eccles Building for the last several decades. Indeed, the latter now sits at ground zero in the Swamp, and the Donald didn’t even bother to look beyond its walls to fill a job that in many ways is more crucial and powerful than his own.

As the Donald would tweet it, SHAME!

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