Jerome Powell, after last week’s FOMC meeting, said inflation has run hotter than expected. However, he wants to assure Americans that the destruction of their dollars’ purchasing power is temporary.
His diagnosis? Ballooning demand for goods and services when the U.S. economy reopened from COVID shutdowns drove prices higher.
Rest easy, folks. Prices will stop surging as soon as demand moderates and supply catches up!
That’s the official line, anyway.
Americans should not hold their breath. Powell’s diagnosis overlooks a couple other drivers of inflation.
He is like Dr. Anthony Fauci and other political hacks who have overrun the DC/Wall Street swamp. They never take responsibility and always spin.
Powell is aware, but failed to mention, that the Fed cut interest rates back to zero in March 2020 and the Fed balance sheet has exploded as the central bank accelerated bond purchases.
He didn’t bring up the trillions of dollars in stimulus payments sent directly to U.S. consumers. Or the enhanced unemployment benefits which kept laid off workers flush with free money.
Or the moratoriums on evictions and foreclosures which eliminated rent and mortgage expenses for millions of Americans.
To fund this extraordinary largesse, the Treasury sold trillions of dollars of new debt to the Fed which conjured the dollars to purchase those bonds from thin air.
Powell knows these benefits were paid for by inflation of the money supply. If supply and demand had anything to do with rising prices, it was because market signals weren’t allowed to function. Government lockdowns disrupted entire industries.
The central planners always concoct some kind of story. Americans are feeling the reduction of their purchasing power.
They are poorer, and Powell doesn’t want to be blamed. So he is lying about the causes and, incredibly, wants Americans to trust he has the solution. It is standard operating procedure in the Swamp.
The more people are convinced higher prices are temporary, the less they will take steps to protect themselves by, for example, acquiring physical precious metals.
But lots of Americans don’t believe what they are being told. The flood of buyers into the bullion markets over the past 18 months is one indication of that.
They understand inflation is a form of tax which hits the poor and middle class hardest. And rising prices aren’t going to be “transitory” so long as Congress and the Fed remain unrestrained.
Clint Siegner is a Director at Money Metals Exchange, a precious metals dealer recently named “Best in the USA” by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.
Image: Anthony Freda Art
Provide, Protect and Profit from what’s coming! Get a free issue of Counter Markets today.