Left: FOMC Chair Powell answers a reporter’s question at the September 18, 2019 press conference. Right: Chair Yellen responds to questions during the June 17, 2015 FOMC press conference. Photos courtesy of the Federal Reserve.
Leading America’s economy today are Jerome Powell, current chairman of the Federal Reserve Board of Governors, and Treasury Secretary Janet Yellen, the former chairman of the Federal Reserve Board of Governors. Former congressman and presidential candidate, Dr. Ron Paul explains that both missed, or ignored, the threat of inflation to America. The blunder, he suggests, lays bare the folly of relying on a secretive central bank. He writes at the Ron Paul Insitute (abridged):
President Joe Biden has unveiled a three-part plan to fight inflation — or at least make people think he is fighting inflation.
One part of the plan involves having government agencies “fix” the supply chain problems that have led to shortages of numerous products. Of course, any attempt by the government to solve the supply chain problems (which were caused by prior government interventions such as shutting down the economy for over a year) will not just fail to solve the supply shortages but will create new problems.
Deficit reduction is another part of Biden’s anti-inflation plan. However, Biden is not proposing cutting welfare or warfare spending. Instead, his deficit reduction plan consists of “tax reforms to increase revenue,” which is DC-speak for tax increases. History shows that tax increases unaccompanied by spending cuts end up increasing the deficit.
The last and most important part of Biden’s inflation plan is recognizing that the Federal Reserve “has the primary responsibility to control inflation.” President Biden has pledged to “respect the Fed’s independence,” unlike former President Trump, who Biden accused of “demeaning the Fed” by subjecting the central bank to mean Tweets.
Federal Reserve Chairman Jerome Powell remains committed to more rate increases this year. However, even if the Fed follows through on all its projected rate increases, rates will still be at historic lows.
Treasury Secretary and former Fed Chair Janet Yellen and Chairman Powell have both admitted they were wrong to publicly dismiss inflation as “transitory.” The fact that the two most recent Fed chairs made such a huge blunder (or purposely refused to admit what was clear to many people for over a year), shows the folly of relying on a secretive central bank to manage monetary policy. Instead of “respecting the Fed’s independence,” President Biden should work with Congress to audit, then end the Fed.
By Ron Paul, MD, Ron Paul Institute
Dr. Ron Paul is a former member of Congress and Distinguished Counselor to the Mises Institute.
If you’re willing to fight for Main Street America, click here to sign up for my free weekly email.
