Dear Reader,
The Hon. Jerome H. Powell appeared yesterday before the United States Senate Banking Committee.
There he delivered the semiannual Monetary Policy Report to the Congress… in fulfillment of his obligations under the Humphrey-Hawkins Full Employment Act of 1978.
A Federal Reserve chairman takes such occasions to serve his central mandate:
To talk much — and say little…
To babble platitudinous mummeries until sleep seizes his audience… drool courses down their chins in streams… and a chorus of snores overpowers his voice.
Zzzzzz… Zzzzzz… Zzzzzz
By all reasonable standards Mr. Powell attained high success yesterday. He testified that:
- We know that reducing policy restraint too fast or too much could hinder progress on inflation.
- At the same time, reducing policy restraint too slowly or too little could unduly weaken economic activity and employment.
- We are attentive to the risks to both sides of our dual mandate, and policy is well positioned to deal with the risks and uncertainties that we face.
A miracle of clarity!
On the one hand… on the other hand… in this case this… in that case that.
And so Hypnos — the Greek god of sleep — was busy among the Senate Banking Committee yesterday.
The One Question Powell Can’t Answer
Yet if I were a standing member of the august Senate Banking Committee, I would have one question for the chairman.
It would be a simple question. Yet it would likely deliver the chairman into panicked sweats… and confused stammerings.
He could not answer the question honestly.
This is because an honest answer would expose the monstrous fraud at the center of his profession.
That question would go this way:
“Chairman Powell, why is there no money in monetary policy?”
Hummina, Hummina, Humina
At that precise point the sweating and the stammering would commence… and gobs of gibberish could come gushing from his oral orifice.
It is true. Central bank “monetary” policy has no actual existence.
No money stands beneath it, behind it, beside it.
The monetary emperor is well and truly nude.
Who then actually governs monetary policy today?
The answer may very well lie hidden in the “shadows.”
The details — the shocking details — follow.
Monetary Policy Is Actually About Credit and Debt
Here moneyman par excellence Jeff Snider — he of Alhambra Investments — rams a sharp stake through the heart of the monetary myth:
- Monetary policy has been quite intentionally stripped of money. Banks evolved and there was really no easy way to define money beyond a certain point (in the ’60s), so economists just gave up trying…
- Money as it relates to “monetary” policy is not really money at all. What monetary policy refers to in contemporary terms is something wholly different… When the Federal Reserve… act[s] on monetary measures, they seek not to increase the supply of money to the economy but rather the supply of credit…
- Monetary policy in the modern sense of the word actually has little to do with money. Instead, it is always and everywhere about credit and debt…
The Fed Is an Engine of Debt
As I have stated before in these pages:
All money is debt-based money in today’s lunatic and preposterous world.
The dollar in your wallet you consider an asset. But only someone else’s previous debt fanned it into existence.
Technically it is a Federal Reserve note. A note is a debt instrument.
Thus money is debt in today’s world. Debt represents a claim upon the future.
The Federal Reserve is a vast engine of debt.
Yet here this Snider fellow commits perhaps the grandest heresy in economics and finance:
He claims that the Federal Reserve and all central banks are largely powerless…
The Central Bank Is Not Central
Central bankers are merely men behind curtains… irrelevancies… and the emperor in fact wears no clothing.
Here Snider strips the emperor bare:
- The Fed is, largely outside of temporary sentiment, irrelevant. The central bank is not central… The thing people have the most trouble with is the idea that central banks are not central.
- It flies in the face of everything you have been taught and told your whole life. The media still gives these guys every benefit of every doubt, and central bankers (ab)use that privileged platform to perpetuate their myth.
Central banks are not central? The Federal Reserve is irrelevant?
As well argue that gravity is a vicious fiction, that 2 and 2 is 97, that Washington never axed the cherry tree.
It’s All Sleight of Hand
Mr. Snider further argues that the interest rate the Federal Reserve monkeys — the fed funds rate — is likewise an irrelevancy:
- There is absolutely no legitimate reason why anyone should [notice federal funds.] The federal funds market is a nonentity… pocket change… It is the sparest of spare liquidity… Today, federal funds is nothing, an extraneous anachronism.
Yet Mr. Powell has Wall St. dangling upon tenterhooks each instance the Federal Open Market Committee huddles.
They cede him powers he does not in fact wield.
They believe his abracadabra.
The Fed’s Target Audience: You
Why then does the Federal Reserve place great emphasis upon the federal funds rate? Here is the answer:
It wants you to believe that it has Mr. Market by the snout — that its false fireworks steer and direct him:
- What was decided, essentially, was to keep federal funds as the primary monetary policy focus. The reason? You.
- Monetary policy contains no money; it runs entirely on expectations. Therefore, according to this view, what ultimately matters is how you perceive monetary policy…
- So the FOMC decided that for the public they would still use federal funds to signal to you their intentions… There is no money in monetary policy; it is entirely psychology.
Blasphemy mounts upon blasphemy!
But if not the central banks… who or what is central to monetary policy?
Who is running monetary policy?
I now set you dangling from my own hook. You must return tomorrow.
In tomorrow’s issue I reveal the answer.
Regards,
Brian Maher
for Freedom Financial News
