One of the most powerful men in the world, Chairman of the Federal Reserve Jerome Powell, appeared on 60 Minutes over the weekend. The interview did not mention Austrian economics, a return to the gold standard, or a new laissez-faire stance by the Fed. But there are some thought-provoking sound bites.
When asked if the Fed had simply flooded the system with money, Powell responded, “Yes. We did.” When asked where the money came from, he replied:
We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury bills or bonds for other government-guaranteed securities. And that actually increases the money supply.
Although true (and completely ludicrous) it’s nothing new, as central bankers seem to have no problem supporting inflationism. However, his follow-up sentence was patently false:
We also print actual currency and we distribute that through the Federal Reserve banks.
It is in fact the US Treasury that prints every Federal Reserve note and gives it to the Fed, which then distributes to banks. Why does the world even need the Federal Reserve? And why doesn’t the US Treasury cut out the middleman and print its own currency? The interview continued with the usual fawning over central bankers. Scott Pelley couldn’t help mention how:
Some of the best economic analysts in the world report to you.
One can only wonder how many Austrian economists work at the Fed and what types of analysis could be provided when analyzing trillions of dollars of “stimulus” required to fight a “liquidity crisis.”
Assurances to the market and hopes for future debtors to the Fed were also included:
I will say that we're not out of ammunition by a long shot. No, there's really no limit to what we can do with these lending programs.
Is this not the most alluring trait of money created out of thin air and backed by nothing? Having no limit on the amount which can be generated? Most of the Fed facilities haven’t even opened up yet, and Congress is already cooking up another trillion-dollar spending bill. We can only guess how much money will be “printed” by the time the crisis is over. If the Fed’s balance sheet doubled by this time next year, would anyone really be surprised?
Oddly enough, the chairman mentioned something that was entirely honest:
We don't have oversight over Congress. Quite the reverse, actually. We're a creature of Congress. And they have oversight over us.
Congress created the Fed. Contrary to what we’ve been told, the it cannot save the world by creating more money. It hasn’t worked before, and it won’t work now. In terms of oversight, if Congress wants more transparency, it can simply demand it, repealing any privacy that the Fed has. America survives not because of the Fed, but despite it. Just as an act of Congress created it, an act of Congress can end the Fed.
