'Powell’s rejection of Volcker’s framework coincided with the Fed ignoring nearly unprecedented liquidity growth in 2020 and 2021, which in turn, led to the worst cost of living crisis in 42 years. 180 million Americans suffered the largest permanent decline in real wage, salary and retirement income since 1980. The size of this pain was far greater than the benefit gained from roughly 6 million new jobs .. By ignoring money growth, as in recent years, the Fed is less likely to know when it is consistent with price stability.''..Powell’s statement is totally inconsistent with Paul Volcker’s final say on monetary economics .. If the Fed fails to complete the promising start to neutralizing the liquidity mountain of 2020-21, Fed actions will result in higher inflation, perpetuation of the cost-of-living crisis and a lower standard of living with greater and longer lasting job losses than if they stay their present course .. The Fed’s mettle will be tested because highly over leveraged institutions will fail as they historically have done in such situations. Bad actors or their enablers should be directed to bring their collateral to the discount window or, if necessary, to the bankruptcy process rather than be given bailouts that have severely widened the income and wealth divides in the U.S. while causing the Fed to sacrifice price stability that's so essential for broad-based economic gains.''
Money: Powell, in testimony before the Senate Committee on Banking, Housing and Urban Affairs in February 2021, disagreed very sharply with Volcker on the role of money. In the same hearing in which he incorrectly said that inflation was not a problem anytime soon, he had an interchange with Senator Kennedy on money and inflation. In response to Kennedy’s concern that rapid growth in money would lead to accelerating inflation, Powell replied “When you and I studied economics a million years ago M2 and monetary aggregates seemed to have a relationship to economic growth.” Then he added “Right now... ...M2... does not really have important implications... ...so something we have to unlearn, I guess.” Powell’s statement is totally inconsistent with Paul Volcker’s final say on monetary economics shortly before he died. Moreover, Powell’s rejection of Volcker’s framework coincided with the Fed ignoring nearly unprecedented liquidity growth in 2020 and 2021, which in turn, led to the worst cost of living crisis in 42 years. 180 million Americans suffered the largest permanent decline in real wage, salary and retirement income since 1980. The size of this pain was far greater than the benefit gained from roughly 6 million new jobs .. By ignoring money growth, as in recent years, the Fed is less likely to know when it is consistent with price stability. (p. 2)
..
..If the Fed fails to complete the promising start to neutralizing the liquidity mountain of 2020-21, Fed actions will result in higher inflation, perpetuation of the cost-of-living crisis and a lower standard of living with greater and longer lasting job losses than if they stay their present course. (p. 3)
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The FOMC greatly damaged their credibility when they allowed inflation to race far above their target. Sadly, the deteriorating economic prospects are a direct consequence of the Fed’s failure to execute their fiduciary responsibility to the American public. Almost universally, the other members of the FOMC have supported the Fed chair's position that low inflation is of paramount importance to deliver a rising standard of living for all. If the Fed were to abandon its commitment to the inflation target, the FOMC would suffer a major double blow to its integrity, which would be increasingly more difficult to restore as Volcker so cogently argued. Failure of the Fed to achieve its target would also have the consequence of allowing an emergent money/price/wage spiral to become entrenched, causing a dismal replay of the two-decade span from the early 1960s to the early 1980s. The Fed’s mettle will be tested because highly over leveraged institutions will fail as they historically have done in such situations. Bad actors or their enablers should be directed to bring their collateral to the discount window or, if necessary, to the bankruptcy process rather than be given bailouts that have severely widened the income and wealth divides in the U.S. while causing the Fed to sacrifice price stability that's so essential for broad-based economic gains. These considerations suggest that the Fed’s current stance should continue. The long-term Treasury market is in the zone of digesting the rapid inflation of the past several quarters, and future Fed rate hikes. Barring any capitulation in the determination to quell inflation by the Fed, long Treasuries will increasingly reflect the looming recession and its deflationary circumstances. (p. 5)'
- Dr. Hunt,
Third Quarter 2022, October 13, 2022,
Context (Banking Reform) - 'Disaster is a strong but appropriate word that applies perfectly to the state of U.S. monetary policy..' - Dr. Hunt(Global Stagflation) - '..the failure of Bernanke-style central bank inflationism.' - '..In Austrian Economics parlance, it’s been epic malinvestment.'(Global Stagflation) - 'This situation has essentially morphed into a cost-of-living crisis..' - Dr. Hunt(Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..'