– Is the New Fed Chief Jeremy Powell a “Swamp Critter Extraordinaire”?
– Trump surrounding himself with elites disconnected from everyday society
– Realities of America’s difficulties not recognised by US power makers
– Powell will likely continue to protect Wall Street over Main Street
– Savers should diversify to protect themselves from Fed’s ponzi policies
Editor: Mark O’Byrne
Just like many of his other campaign promises, Trump isn’t doing a great job of draining the swamp. His nominee for Fed Chair is Jerome Powell.
Powell is a ‘swamp critter extraordinaire’ so declared by Bill Bonner last week. We’re inclined to agree. Name-calling is poor sportsmanship when it comes to politics, but hey, Trump started it.
When Trump traveled around the United States campaigning for the most privileged position in the country he lashed out at the seemingly abstract promise to ‘Drain the Swamp’ at every opportunity. He used it to criticise anything he didn’t like about the status-quo.
He made the ‘swamp critters’ the fall-guys for every hardship Americans were facing. In many ways he was right.
Yet as has been the case throughout the last eleven months, Trump hasn’t done a great job of turning rhetoric into reality.
He has continued to fill the swamp rather than drain it. Spending by lobbyists has reached levels unseen since 2012. Secretaries are flying in private government jets and Trump uses Republican Party money to fund his own legal expenses.
This is nothing compared to the senior appointments he has made. Trump has taken ‘swamp critters’ and placed them in positions of such power and influence one wonders what his supporters make of it all.
Hypocrisy was a word heard frequently during the Obama Presidency. Obama was great with words and preached peace while practicing war. Trump’s hypocrisy is on a whole new level.
Powell is just his latest appointment. With an estimated fortune of $55 million the likely new Fed Chair has spent his career in Washington flip-flopping between roles in both regulation and industry. He is now set to take the wheel at a job whose sole role is to steer the US economy. Indeed, some more imperially minded Americans see the job as being to steer the global economy.
Trump is like a school boy with football stickers, keen to make up the set of Team Wall Street. As Vox outlined:
Trump will have in place a Wall Street Fed chair to go with his Wall Street Treasury secretary, Wall Street Council of Economic Advisers chair, and Wall Street slate of bank regulators.
In a country that is set to see 8,000 retail store closings this year (more than in 2008), where not a single person is employed in nearly one out of every five U.S. families and almost 60% of people do not have enough money saved to even cover a $500 emergency expense, can another Washington elite be expected to build an economy that will benefit the many?
Powell, another Swamp dweller or worse, a crony?
Unsurprisingly Powell’s nomination was a step away from the norm for Trump. Previous Presidents have usually renominated the incumbent chair. Given Trump’s ongoing criticism of Yellen a replacement was expected.
One thing that was expected was the financial stature and Wall Street position of a Trump nominee. Powell is a Republican who built a vast wealth as a partner at Carlyle. In Powell’s latest financial disclosure (June 2017) he lists his net worth between $19.7 million and $55 million. Once he is Fed Chair he will be the richest Fed chair since banker Marriner Eccles, who held the position from 1934 to 1948.
What wasn’t quite expected in this nomination was how similar to Yellen the nominee would be.
Powell has often backed Ms. Yellen on a number of issues from raising interest rates to reducing the Fed’s balance sheet. He has supported every policy decision since joining the Fed, including interest rate increases, and supported its decision to unwind the bond-buying program put in place during and after the 2008 financial crisis.
There might be some difference in bank regulation. Yellen has often given a somewhat skeptical view of the pro-business approach by the current White House. However given Trump’s appointment of Randy Quarles, a dedicated deregulator, as the Fed’s vice chair in charge of regulation, there is likely to be little noticeable change here.
The important thing, from our point of view, is that he can be relied upon to do exactly as expected.
Like Ms. Yellen, he will be in favor of shrinking the Fed’s balance sheet… and raising interesting rates… until the money supply tightens and all hell breaks loose.
Then, he will move heaven and earth to protect the Deep State from bankruptcy… with an aggressive program of QE Encore.
The one area where there is a major difference is the the strong academic background in monetary policy that both Yellen and Ben Bernanke shared. This is where Powell is most certainly lacking. But, given the horrors seen as a result of previous chairpersons, this might not be such a terrible thing.
Where this will backfire is if Powell is easily persuaded by the views of others. Others who might just not have the entire country’s interests at heart, say… everyone else from a pro Wall Street position?
This isn’t an impossible thing to imagine. He reportedly likes to raise any concerns he has in private rather than in public. At first this sounds like a professional approach, but in a political climate where the President will bully publicly we perhaps need a Fed Chair who is willing to shout about any concerns he has. Powell seems to be a people-pleaser.
What the president wanted was a Republican without particularly strong views on monetary policy, someone who would continue with Yellen’s softly, softly approach to raising rates but would be ready to roll back some of the post-crisis regulations imposed on the financial sector. By those criteria, Powell was the perfect choice. The Guardian
In short, Powell comes from the background Trump likes and he seems to have the personality the President can handle. Powell is unlikely to make life difficult for Trump and the rest of the swamp. Worryingly we may be faced with little upset as it will be business as usual but this may result in far more upset in the wider economy.
Far removed from reality
Powell isn’t the only one who appears to have never looked beyond America’s elite when it comes to life experience. He will no doubt have to have a close working relationship with the US Treasury Secretary whose department works hand in hand with the Federal Reserve to pres