The Fed’s Asylum
Congress did two amazingly idiotic things last week.
First, the House passed a US$40 billion aid package for Ukraine.
Second, the Senate approved Jerome Powell for another stint at the Fed.
How the two are related…and what it means for the Fed’s promise to stop inflation…are the dots we’re trying to connect.
It was only a few months ago that Americans didn’t give two figs about Ukrainians. But now, every red-blooded heart beats with them…every sturdy pair of legs stands with them…and every dollar of federal spending includes a few centimes for the Zelenskyy government.
And why not? Ukrainians are minted in the likeness of Washington and Jefferson…defenders of democracy and freedom, one and all. But wait…all great causes, like sewer systems, look good in diagrams; they get messy and malodorous when you get into the details.
After all, the people of the Donbas and Luhansk regions — Russian speakers — voted to leave Ukraine. Shouldn’t democracy lovers support them rather than the strong-arm centralisers of Kyiv? And if Zelenskyy is such a democracy and freedom lover, how come opposition parties have been banned?
Who’s right? Who’s wrong? We don’t know. Neither does the Biden Administration.
But as to US$40 billion, we know this: it’s money the feds don’t have…and, if they had it, they shouldn’t give it away. The US is most likely on the threshold of a huge crash and a recession; this is no time to be squandering money on foreign policy malarkey.
Of course, US$40 billion won’t bankrupt the nation, and the Russians won’t sink it, which is why the second thing Congress did is even more important…and more foolish.
We’re ready to forgive almost anything. Lincoln forgave the rebels for trying to assert their independence, after killing a quarter of them. And Isaac forgave Abraham, after the latter nearly carved him up.
But forgiving is one thing…asking him to take another stab at it is another.
In the news recently was the story of a member of Congress who was caught watching porn during a House session.
Our sympathies were with the politician. Anyone who has spent any time in Washington knows that Congress is one of the dullest, emptiest, most puerile places on the planet. Everything said is either a lie or buffoonery. No honest man lasts very long — unless he can find something to distract himself. Maybe dirty pictures are just a way to keep things in perspective.
The man denied the charge but was condemned nevertheless and would have been taken behind the tool shed if there were one.
There are some things you can do in public office. And some things you can’t. Use the ‘n’ word, and your career is over. Pinch your secretary’s derriere, and you will be handed a loaded pistol.
But fumble, rob, cheat, lie, cause millions of deaths — and you get reappointed!
The make-believe battle between the two wings of the ruling class — ‘conservative’ and ‘liberal’…Republican and Democrat — occupies the press and satisfies the public. But when push comes to shove, both wings of the Deep, Deep State flap together. They carry the elite aloft…and leave ‘the people’ behind.
In both acts of Congress last week, Republicans and Democrats acted in unison…and solemnly voted to rip off the public.
In the first instance, the American public has no real interest in the country where Hunter Biden earned US$50,000 per month. Surely, it’s a coincidence that this very same country is now getting more in US aid than any other country in the world. Indeed, Ukraine is now getting twice as much as the next biggest rathole — Israel.
But much of the money ends up in good hands — the US ‘defence’ industry. And keeping the war going is also a priority because it helps distract the public from inflation, which was caused by Congress and the Fed.
The Fed’s asylum
This brings us to the second and more destructive of last week’s blunders — the confirmation of Jerome Powell’s reappointment as capo di tutti capi at the Fed. We now suffer the highest inflation rate in 40 years. And the public despises it. It’s a ‘tax’ but a particularly painful and insidious one. It falls like an unmoored window unit on the heads of the poorest among us. As we showed yesterday, higher food prices will likely condemn millions of the poorest people on the planet to starvation.
So why leave the man most responsible for causing it at his post?
You could set up a roadblock outside a Kentucky Fried Chicken joint and find dozens of people who would make better Fed chiefs. That’s no salute to the genius of those ensnared but to the fact that their minds are unpolluted by the Fed’s economic claptrap. No greasy talk of ideal 2% inflation. No hallucinations about the ‘wealth effect’. And no orgasmic thrill at the thought of providing more ‘stimulus’.
Which is to say, most people have not spent their whole careers in the luxury wards of the Fed’s asylum; instead, they’ve had a chance to see the real world in action.
Markets correct mistakes. Politics, rarely. In the Incompetents Hall of Fame are the generals who led the US’s 20-year losing war in Afghanistan; they are treated with the respect normally reserved for successful people. There are the retired presidents, too — Bush, Obama, Trump. Despite their failures, they’re rarely threatened by lynch mobs. Former Fed chiefs are there too. Greenspan, Bernanke, Yellen, Powell — together, they helped cut the US growth rate in half…and multiplied US debt five times. And yet, they’re still invited to give speeches; some — such as Janet Yellen — get to do even more damage as Secretary of the Treasury.
And Powell? In Washington, he has street cred. With a US$30 trillion debt, the feds are going to need a lot more inflation in the years ahead; Powell may be a cretinous counterfeit, but he’s proven he can do the job.
More to come…
For The Daily Reckoning Australia