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Re: Jerome Powell, Who Wildly Misjudged Inflation, Is Overwhelmingly Reconfirmed as Fed Chair
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Songbird Johnny
Jun 24, 2022, 6:05:05 AM6/24/22
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In article <XnsAC97B8...@95.216.243.224>
governo...@gmail.com wrote:
>
> ...I spent all night taking it up the ass.
After presiding over the biggest Federal Reserve failure in 40
years and with inflation rating as the top concern among
Americans, Jerome Powell's nomination to a second term as
chairman was approved this past week by the Senate, 80–19.
I know the usual arguments for ignoring the Fed's spectacular
errors, even at a time when inflation is such an issue. Most
common are that other candidates would be even worse or that we
need continuity. Maybe. The truth, though, is that a good person
facing bad incentives in that job will make poor choices. Add in
a lack of accountability and you repeatedly get bad policies.
That type of continuity is not that appealing to me.
Inflation is rising globally, but it's much worse in the United
States, largely because of the excessive spending legislated in
early 2021 via the American Rescue Plan (ARP). Powell was a
giddy cheerleader for the $2 trillion, which many warned would
cause inflation—especially as the Fed announced it would
continue its overly accommodating monetary policy with no end in
sight.
When inflation started to pick up, Powell argued that it was
"transitory" because it was the product of supply-chain
constraints. Apparently, no one at the Fed checked how many
goods were getting through the ports. If they had, they would
have known that by the end of 2020, more goods were getting
through than before the pandemic. Also, in 2021, most countries
barely suffered any inflation, which is incompatible with the
theory that inflation is caused by global supply-chain
disruptions.
And so, right under the chairman's nose, inflation accelerated.
Powell didn't just ignore the Fed's mandate to pursue price
stability; he flouted this mandate with "innovative" inflation
targeting. This was supposed to allow the economy—and
inflation—to run hot in the name not only of reducing
unemployment (another Fed mandate), but also the pursuit of
shiny goals such as encouraging "inclusive" growth.
When the chairman at the end of 2021 acknowledged that we had
inflation, he still did very little about it. He didn't stop the
Fed's purchase of treasuries until March 2022. Very small rate
hikes were announced well into 2022, which likely will not be
enough to tame inflation. Stunningly, many people still believed
that those who failed to see inflation coming could engineer
something that has never been done successfully in the past: a
soft landing.
The reasons for this failure are many. A big one is that most
people at the Fed, and in various agencies and outside of
government, worship at the altar of Keynesian thinking. They
believe that government spending solves all economic problems.
Another source of failure is poor incentives. Politicians and
bureaucrats (including the chairman) don't have the benefit of
profit-and-loss signals sent by the market.
Most bureaucrats in executive agencies are also unelected and
unappointed by the Senate, and, thus, are largely unaccountable
to the public. Who will, for instance, lose their job at the
Centers for Disease Control and Prevention for their many
mistaken COVID-19 recommendations and diktats, including those
on school closures and masking? The consequences will be paid by
children for years to come but not by those responsible.
The need to secure Senate confirmation is no guarantee that
higher-level bureaucrats will be held accountable, as evidenced
by Powell's own nomination. But that too could be because
senators aren't terribly accountable themselves.
Indeed, research shows that ordinary citizens don't often vote
their representatives out of office for their big failures. In
part, it's because many voters are rationally ignorant, as most
can't or don't keep track of all the votes of everyone in
Congress, or even of their own representatives on issues they
truly care about.
Voters, for instance, often let politicians get away with
failing to deliver on campaign promises. Republicans rarely
suffer for claiming to support small government on the campaign
trail but spending through the nose while in office. Meanwhile,
Democratic legislators pretend to be the big defenders of lower-
income voters and small business while supporting every crony
program favoring large companies, hindering competition and
raising prices at the expense of consumers.
Finally, the now-common practice of voting against a candidate,
rather than for one, isn't conducive to accountability, either.
I therefore should not be shocked that Powell's renomination as
Fed chairman sailed through the Senate. Under these
circumstances, don't be surprised by the continued pursuit of
bad policies.
https://reason.com/2022/05/19/jerome-powell-who-wildly-misjudged-
inflation-is-overwhelmingly-reconfirmed-as-fed-chair/
governo...@gmail.com wrote:
>
> ...I spent all night taking it up the ass.
After presiding over the biggest Federal Reserve failure in 40
years and with inflation rating as the top concern among
Americans, Jerome Powell's nomination to a second term as
chairman was approved this past week by the Senate, 80–19.
I know the usual arguments for ignoring the Fed's spectacular
errors, even at a time when inflation is such an issue. Most
common are that other candidates would be even worse or that we
need continuity. Maybe. The truth, though, is that a good person
facing bad incentives in that job will make poor choices. Add in
a lack of accountability and you repeatedly get bad policies.
That type of continuity is not that appealing to me.
Inflation is rising globally, but it's much worse in the United
States, largely because of the excessive spending legislated in
early 2021 via the American Rescue Plan (ARP). Powell was a
giddy cheerleader for the $2 trillion, which many warned would
cause inflation—especially as the Fed announced it would
continue its overly accommodating monetary policy with no end in
sight.
When inflation started to pick up, Powell argued that it was
"transitory" because it was the product of supply-chain
constraints. Apparently, no one at the Fed checked how many
goods were getting through the ports. If they had, they would
have known that by the end of 2020, more goods were getting
through than before the pandemic. Also, in 2021, most countries
barely suffered any inflation, which is incompatible with the
theory that inflation is caused by global supply-chain
disruptions.
And so, right under the chairman's nose, inflation accelerated.
Powell didn't just ignore the Fed's mandate to pursue price
stability; he flouted this mandate with "innovative" inflation
targeting. This was supposed to allow the economy—and
inflation—to run hot in the name not only of reducing
unemployment (another Fed mandate), but also the pursuit of
shiny goals such as encouraging "inclusive" growth.
When the chairman at the end of 2021 acknowledged that we had
inflation, he still did very little about it. He didn't stop the
Fed's purchase of treasuries until March 2022. Very small rate
hikes were announced well into 2022, which likely will not be
enough to tame inflation. Stunningly, many people still believed
that those who failed to see inflation coming could engineer
something that has never been done successfully in the past: a
soft landing.
The reasons for this failure are many. A big one is that most
people at the Fed, and in various agencies and outside of
government, worship at the altar of Keynesian thinking. They
believe that government spending solves all economic problems.
Another source of failure is poor incentives. Politicians and
bureaucrats (including the chairman) don't have the benefit of
profit-and-loss signals sent by the market.
Most bureaucrats in executive agencies are also unelected and
unappointed by the Senate, and, thus, are largely unaccountable
to the public. Who will, for instance, lose their job at the
Centers for Disease Control and Prevention for their many
mistaken COVID-19 recommendations and diktats, including those
on school closures and masking? The consequences will be paid by
children for years to come but not by those responsible.
The need to secure Senate confirmation is no guarantee that
higher-level bureaucrats will be held accountable, as evidenced
by Powell's own nomination. But that too could be because
senators aren't terribly accountable themselves.
Indeed, research shows that ordinary citizens don't often vote
their representatives out of office for their big failures. In
part, it's because many voters are rationally ignorant, as most
can't or don't keep track of all the votes of everyone in
Congress, or even of their own representatives on issues they
truly care about.
Voters, for instance, often let politicians get away with
failing to deliver on campaign promises. Republicans rarely
suffer for claiming to support small government on the campaign
trail but spending through the nose while in office. Meanwhile,
Democratic legislators pretend to be the big defenders of lower-
income voters and small business while supporting every crony
program favoring large companies, hindering competition and
raising prices at the expense of consumers.
Finally, the now-common practice of voting against a candidate,
rather than for one, isn't conducive to accountability, either.
I therefore should not be shocked that Powell's renomination as
Fed chairman sailed through the Senate. Under these
circumstances, don't be surprised by the continued pursuit of
bad policies.
https://reason.com/2022/05/19/jerome-powell-who-wildly-misjudged-
inflation-is-overwhelmingly-reconfirmed-as-fed-chair/
P-Dub
Jun 27, 2022, 7:17:04 AM6/27/22
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