Powell is the right man for the job
If you need someone to ruin an economy, the Fed chief is your man
The US Congress is always doing amazingly idiotic things, but it recently surpassed itself and approved Jerome Powell for another stint as capo di tutti capi at the Federal Reserve. We’re ready to forgive almost anything. Isaac forgave Abraham, after the latter nearly carved him up. But forgiving is one thing… asking the villain to take another stab at it is another.
In the news recently was the story of a member of Congress who was caught watching pornography during a House session. The man denied the charge, but was condemned nevertheless and would have been taken behind the toolshed if there were one. There are some things you can do in public office. And some things you can’t. Looking at dirty pictures is out. But fumble, rob, cheat, lie, cause millions of deaths – and you get reappointed!
The inflation tax bites
Just look at Powell. We now suffer the highest inflation rate in 40 years. And the public despises it. It is a “tax”, but a particularly painful and insidious one. It falls like an unmoored window unit on the heads of the poorest among us. As we have argued previously, higher food prices will probably condemn millions of the poorest people on the planet to starvation. So, why leave the man most responsible for causing it at his post?
You could set up a roadblock outside a Kentucky Fried Chicken joint and find dozens of people who would make better Fed chiefs. That is no salute to the genius of those ensnared, but to the fact that their minds are unpolluted by the Fed’s economic claptrap. No greasy talk of ideal 2% inflation, no hallucinations about the “wealth effect”. And no thrill at the thought of providing more “stimulus”. Which is to say that most people have not spent their whole careers in the luxury wards of the Fed’s asylum; instead, they’ve had a chance to see the real world in action.
Markets correct mistakes. Politics, rarely. In the incompetents’ hall of fame are the generals who led America’s 20-year losing war in Afghanistan; they are treated with the respect normally reserved for successful people. There are the retired presidents, too – George Bush, Barack Obama, Donald Trump. Despite their failures, they are rarely threatened by lynch mobs. Former Fed chiefs are there too. Alan Greenspan, Ben Bernanke, Janet Yellen, Powell – together they helped cut the US growth rate in half and multiplied US debt five times over. Yet they are still invited to give speeches; some – such as Yellen – get to do even more damage as secretary of the treasury.
And Powell? In Washington, he has street cred. With a $30trn debt pile, the feds are going to need more inflation in the years ahead to get rid of it. Powell may be a counterfeit, but he’s proved he can do the job.
“Markets correct mistakes. Politics, rarely”