The Fed Has Handed the US Government a Blank Check
On Wednesday, Federal Reserve Chairman Jerome Powell called for a “society-wide” commitment to reaching full employment, calling for “contributions from across government and the private sector.” He said getting people back to work would require “continued support from both near-term policy and longer-run investments.” He also dismissed concerns about debt saying the focus needs to be on the economy’s immediate needs. As Peter Schiff put it in his podcast, Powell handed the US Treasury a blank check.
Peter said Powell’s comments were among some of the most dovish he’s ever heard.
I know I’ve said that before, except every time Powell speaks, he exceeds his prior level of dovishness. So, he’s getting more and more dovish as time goes by.”
The markets didn’t show much response to Powell’s comments. Peter said that leads him to believe that a lot of people still don’t understand the significance of what Powell is saying.
Powell was most revealing during the Q&A. He took a number of questions about inflation. As Peter noted, there are signs of exploding prices everywhere. But Powell said he’s not worried and doesn’t see signs of significant inflation.
To me, to ignore all of these signs and not say, ‘Well yes, it is a bit concerning. We are maybe seeing signs of maybe a bigger pickup in inflation than we’re comfortable with.’ — He can’t say that because the markets would be scared that he might raise rates. So, what Powell is doing is throwing cold water on the idea that the Fed might do something to respond to an inflation threat. Because if the Fed claims that there is no inflation threat, well then you don’t have t
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