There was a remarkable statistic in the latest Flow Show report from BofA’s Michael Hartnett: according to the CIO’s calculations, “the Fed is spending $336 million every 60 minutes buying bonds, while the US federal government is spending $875 million every hour this year”, a staggering amount made possible only by the recent merger between the Fed and Treasury which ushered in not only helicopter money but its socialist offshoot, MMT. It’s also what so many monetarists argue is behind the recent surge in inflation, because Milton Friedman said best, “inflation is always and everywhere a monetary phenomenon.”
Not so according to president Joe BIden, however, who on Monday said he believes the surge in U.S. inflation is temporary and that he has told Federal Reserve Chairman Jerome Powell that he respects the central bank’s independence. But he also emphasized that he wouldn’t interfere with the central bank’s policies:
“As I made clear to Chairman Powell of the Federal Reserve when we met recently, the Fed is independent. It should take whatever steps it deems necessary to support a strong and durable economic recovery.”
Biden says “unchecked inflation over the long term would pose a real challenge to our economy” but adds he’s “confident that isn’t what we’re seeing today” pic.twitter.com/FDGUKGBpmc
— Bloomberg Quicktake (@Quicktake) July 19, 2021
Biden said Monday at the White House that recent price increases are “temporary,” in response to loud arguments – not only from Republicans but also the likes of Bank of America and Deutsche Bank and even lifelong democrats such as Larry Summers – that the president’s economic spending plans would cause inflation to spiral out of control.
That said, we wonder if Biden will respect the Fed’s “independence” when the Fed stops monetizing every dollar in debt spent by the Treasury to fund the various stimmy programs launched by the Democrats. As for interfering with the central bank’s policies, one wonders how Biden would do that: tell Powell to stop monetizing all that debt?- READ MORE
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