- “Powell’s termination cannot come fast enough!”…
- The economy might already be in recession, but the Fed doesn’t know it…
- A THIRD term for Trump?…
Dear Reader,
The president is… displeased… with Mr. Powell.
From comments yesterday:
- The ECB is expected to cut interest rates for the 7th time, and yet, “Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete “mess!”
- Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS.
- Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now.
- Powell’s termination cannot come fast enough!…
- If I want him out, he’ll be out of there real fast, believe me.
Trump’s at Least Half Right About Powell
Statute denies the president the authority to terminate the Federal Reserve chairman.
That is because the Federal Reserve is structured to be “independent” of politics.
Of course, the Federal Reserve is not independent of politics.
Yet it would have you believe it is.
Yet the president is at least half correct when he labels Mr. Powell TOO LATE AND WRONG.
He is very likely entirely correct.
A Bunch of Wrong-Way Charlies
For years and years Freedom Financial News contributor Jim Rickards has held the Federal Reserve under his microscope.
What has he observed?
That it is crewed by a bunch of wrong-way Charlies who cannot distinguish up from down, left from right at the price of their souls.
Time after time after time their forecasts prove pure botchwork.
Mr. Powell believes the United States economy is bounding along on the high gear — at least until the president’s tariffs force a downshift.
Thus he has telegraphed intentions to hold rates even at next month’s congregation of the Federal Reserve’s Open Market Committee, so-called.
Already in Recession?
Yet Mr Rickards says have another guess. He fears the United States economy may already wallow in recession.
We are simply unaware of it because the learned women and men within the National Bureau of Economic Research have not announced it.
And if you take history as your guide… they will not likely announce recession until six months after it has ended.
They glance only backwards.
Yet let us return our attention to the Federal Reserve — and its perennial botchwork.
Rate Cuts Won’t Work
When will the monetary authority leap into action? And will it work stimulative effects?
Mr. Rickards:
- Eventually the Fed will reverse course with rate cuts and a renewed policy of quantitative easing. But by then, it’ll be too late.
- Recession will hit long before the Fed [will cut rates] — if we’re not in one already — so cutting rates won’t be much help.
- Federal reserve rate cuts… do not provide “stimulus.” Rate cuts are a sign of economic weakness, not strength. Lower rates are associated with depression and recession. In a strong economy, rates actually go up a bit because higher returns are available, and entrepreneurs compete for funds.
- The Fed is not leading the interest rate market. They are following the market down. That’s bad news for investors because if the Fed were leading the economy, they would get ahead of the coming recession. They’re not doing either.
Is the “Powell Put” On?
What of the stock market’s recent wobbles? Are not Mr. Powell and mates keen to lend a stabilizing hand?
After all: The chairman has intervened to hold Wall Street steady previously.
Thus the term “Powell put” exists for sound reason.
Mr. Powell is in the hands of Wall Street… and on his knees to Wall Street.
Well does he know the taste of shoeblack.
Yet his tongue is not in for a fresh coat, says Mr. Rickards.
You should not expect an immediate return of the Powell put:
- Will the Federal Reserve ride to the rescue of stock investors? Not directly. The Fed actually doesn’t care about the stock market unless it becomes “disorderly.” We’re not there yet.
- Down is not the same as disorderly. If markets crash as they did in March 2020, the Fed probably would activate the Powell Put and quickly cut rates. But the Fed won’t do anything specific to help stocks based on what we’ve seen so far. That’s not their job.
If Mr. Rickards is correct, Wall Street must go along on its own hook — for now at least.
Fire Him!
I conclude by throwing in with the president. I declare for Mr. Powell’s termination.
It is not because of his interest rate settings. It is instead because he is a poor steward of the nation’s central bank.
The Federal Reserve has shed over $225 billion under his stewardship.
That is because the interest it has paid banks has exceeded the interest it has collected on its asset portfolio.
And I — as a United States taxpayer — must ultimately make the shortage good.
Explains Mr. Mike Maharrey of Money Metals Exchange:
- Under the Federal Reserve charter, the central bank remits net operating profits to the U.S. Treasury. This serves as an income source for the federal government and lowers the budget deficit…
- But when the Fed loses money, the Treasury loses its payday. That results in even bigger budget deficits.
- And who pays for federal budget deficits?
- Taxpayers.
- Bigger deficits mean Congress either has to raise taxes to cover the shortfall or the Treasury has to borrow even more money.
- Either way, taxpayers pay.
Thus I cry:
Insist upon Powell’s immediate resignation, Mr. President!
It cannot come soon enough.
Brian Maher
for Freedom Financial News
