Power & Market

Who Is Joe Manchin?

He may not be a household name, but the letter Senator Joe Manchin (D) from West Virginia wrote to the Federal Reserve chair Thursday is worthy of consideration. The notable part is where he writes:

With the recession over and our strong economic recovery well underway, I am increasingly alarmed that the Fed continues to inject record amounts of stimulus into our economy by continuing an emergency level of quantitative easing (QE) with asset purchases of $120 billion per month of Treasury securities and mortgage backed securities.

Recall that the shortest recession in US history, all of two months, ended last April, as announced by the National Bureau of Economic Research in July. Perhaps the delay in reporting the recession data, or the surprisingly short span of the recession helped prompt the senator’s frustration? He continues:

The Fed has sustained $120 billion per month in asset purchases since June 2020, despite increasing vaccination rates to combat the virus and additional fiscal stimulus from Congress in the ARP [American Rescue Plan]. The record amount of stimulus in the economy has led to the most inflation momentum in 30 years, and our economy has not even fully reopened yet.

At the time of writing, the Fed’s balance sheet stood at $8.2 trillion, which is an increase of over $4 trillion since the formal start of the recession last year. He goes on to say that continual stimulus, coupled with further fiscal stimulus, will lead to “unavoidable inflation taxes” Americans cannot afford. He concludes that

it is imperative we begin to understand that long term policy responses tailored for an economic depression, like the Great Depression and Great Recession of 2008, may not be what is required for today’s economy and could result in higher than desired inflation if not removed in time.

The letter is hardly perfect. He doesn’t convey all the nuances, such as the issues with inflation, the Fed’s role in causing booms and busts, etc. And ultimately, he commends the Fed for their intervention, though he questions why it’s continuing this long. It’s understandable, as he’s a senator, not an economist, and may not even be aware of the over-a-century-long history of Austrian economics. However, he seems aware that something isn’t quite right and correctly notes that it’s the Fed’s actions which hurt a lot of Americans.

Albeit small, when someone in the Senate takes an interest in the Fed’s activities and even questions their behavior, it is a step in a better direction. If the ninety-nine other senators and more average citizens question the Fed, it could create opportunities to invoke societal change, to severely limit, and potentially erase the state entirely … one day.

As for the Fed’s response, as reported by Politico:

A Fed spokesperson said the central bank received Manchin’s letter and planned to respond.

We will continue to monitor the situation and look forward to hearing more from the Fed. Until then, let’s consider another question: Where do all the mainstream economists stand with the Fed’s intervention in the free market?

Across the USA, there are a handful of Ivy League schools and countless institutions of higher learning that all teach economics. They each have a roster of academics who get paid to continually study, teach, and write about economics. But the silence from these “intellectuals” remains deafening. It’s almost as if the mainstream academic community didn’t understand what the Fed is doing and therefore remains silent. Or maybe they do understand but don’t care to warn the public. If the latter is true, it could be due to the intellectuals’ comfort and security, which is handsomely paid for by the state. As Hans-Hermann Hoppe once said, the state offers the intellectual “a warm, secure, and permanent berth in its apparatus.”

How difficult is it for the truth, freedom, and liberty to compete with that?

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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