What the Fed Is Not Telling Us

While Federal Reserve Chair Jerome Powell considers the ramifications of his $5 million stock sales prior to the market slump of last year, the rest of us should be left wondering: What else are they not telling us?  This week, some lesser-known members of the Fed offered some ideas worthy of consideration.

On Tuesday, Governor Bowman, at the Women in Banking Symposium asked her audience how America’s central bank can help women:

What can we do to increase opportunities for women who must balance work and home, and what could help keep them from dropping out of the labor force?

She even encourages research on the subject without mentioning where the funding for this would come from. This may be interesting for those in attendance, but it’s also a good idea to speak honestly to people. The Federal Reserve can do a lot to help women. However, the help required is at odds with actions taken by the Fed.

For example, the best way the Fed could help women is to simply leave them alone, but the Fed doesn’t want to leave people to their own devices. With less regulation, women would spend less money and time paying for unnecessary fees. They could also face fewer barriers upon entry. Even if beneficial, it’s highly unlikely the Fed would consider less regulation as a viable solution to anything. The idea of interfering less in the lives of people so they can better manage their own affairs is something not normally mentioned by central bankers. Of course, it’s not surprising that the Federal Reserve would prefer people don’t know about this. It would be self-defeating for them if they did!

On the same day, Governor Waller gave a speech at Stanford regarding economic outlook. The good news:

As the minutes of the September Federal Open Market Committee (FOMC) meeting conveyed, many participants judge that we have achieved substantial progress on our inflation goal.

Understand, whether it’s the cost of lumber, cars, gas or anything else we hold dear in this world, the Fed is pleased that the cost has (probably) increased this year.

There’s no easy way to say this and it’s not hyperbole or exaggeration; the Fed’s goal was to erode your purchasing power, making life more expensive for you. Naturally, they will not tell you their goal is currency devaluation. But that’s exactly what it is. Rather, they will call it inflation targeting or use other words to make it sound less harmful.

Governor Quarles, also gave a speech, on Wednesday, regarding economic outlook. The state of the country similarly looks comforting from his vantage point and the pitfalls of inflationism continue to go unnoticed:

Taking all of the evidence into account, I think it is clear that we have met the test of substantial further progress toward both our employment and our inflation mandates, and I would support a decision at our November meeting to start reducing these purchases and complete that process by the middle of next year. 

This is the quintessential go ahead from Governor Quarles. He confirms he is on board with a reduction in asset purchases next month. But the vote includes the above three governors. Even though he favors reduction in asset purchases, he does clarify:

Reducing purchases and ending them on this schedule is not monetary tightening, but a gradual reduction in the pace at which we are adding accommodation.

The Fed will not be reducing the balance sheet. Instead, they will only increase the balance sheet at a slower pace than before. It sounds similar, but the difference is considerable. Yet, the elephant in the room is unmentioned. What he’s not saying is whether or not a crash in the housing or stock market will soon follow, and whether or not any more members of the Fed’s inner circle will sell millions of dollars in stocks like they did the last time the market crashed.

Between Chair Powell and those closest to him, there exists a recurring pattern of keeping interesting information away from the public, while at the same time claiming the Fed acts in the public’s interest.

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