Tag Archives: Federal Reserve Chairman Jerome Powell

Policies Make A Difference

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On June 28th, Yahoo Finance posted an article about the impact of President Trump’s tariffs. If nothing else, the numbers prove that taxes are not the only way to get funds into the United States Treasury.

The article reports:

President Trump’s tariffs are pouring billions more into US coffers in June, putting the revenue supplied by importers on pace for another monthly record.

The latest measure of government receipts for “Customs and Certain Excise Taxes” stood at almost $27 billion for the month of June, according to the Treasury Department’s latest daily statement dated June 25.

The monthly total is likely to rise only slightly in the coming days, with importers often depositing their tariff duties in a single day and the June 24 statement showing a massive daily deposit of more than $19.9 billion.

June’s total so far has already topped May’s total haul of about $22 billion — not to mention April and March totals of $17.4 billion and $9.6 billion, respectively.

It was a continuation of revenue spikes seen during Trump’s second term in office that are dwarfing counts from recent history as well as the amounts collected during Trump’s first term.

All told, more than $121 billion has flowed into government coffers since the start of this fiscal year.

Commerce Secretary Howard Lutnick touted the pace of deposits earlier this week in a social media post that criticized Federal Reserve Chair Jerome Powell.

“What he avoids discussing is the incredible revenue increase the US has received from these tariffs,” Lutnick said in his post, suggesting the US’s “current run rate” is for more than $30 billion per month.

The article concludes:

The June uptick in revenues, in any case, is on a pace of roughly $1 billion a day in revenue and that remains a tiny fraction of all monthly government spending.

In May — the most recent full month of data available — total government receipts totaled $371 billion.

In recent decades, tariff revenue has tended to constitute about 2% of federal revenue. The surge in recent months has changed that, with revenues now accounting for closer to 4%-5% of that revenue.

Now if Congress would finally cut spending, we might be able to get rid of our massive interest payments.

Lying To Congress Is Not A Good Idea

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Federal Reserve Chair Jerome Powell has been in President Trump’s doghouse lately for his refusal to lower interest rates despite the lack of inflation. He has now tripped over his feet in his testimony to Congress about the plans for revamping the central bank’s Washington headquarters.

On Monday, The New York Post reported:

Federal Reserve Chair Jerome Powell is being accused of lying to Congress after he denied that a $2.5 billion revamp of the central bank’s Washington headquarters will load the facility with lavish amenities — and some are demanding that he be punished, The Post has learned.

Powell called The Post’s exclusive report in April about the bloated renovation project — which led Sen. Tim Scott (R-SC) to liken it to the “Palace of Versailles” during a grilling by the Senate Banking Committee last week — “misleading and inaccurate.”

“There’s no VIP dining room, there’s no new marble. There are no special elevators,” Powell insisted under questioning from the powerful panel on Wednesday. “There are no new water features, there’s no beehives, and there’s no roof terrace gardens.”

Well, not so fast.

The article continues:

But Powell — who is meanwhile facing heat from President Trump over a failure to slash interest rates — directly contradicted the project’s own planning documents, which were signed off on by government pen pushers in 2021 — and which haven’t been revised since.

“The private dining rooms on Level 4 (of the Fed’s Eccles building) will be restored,” reads one excerpt from the filing with the National Capital Planning Commission. “The Governors’ private elevator will be extended to discharge at the dining suite level.”

The documents also expressly mention “vegetated roof terraces” that will welcome “urban wildlife and pollinators” as well as new marble and water features.

Andrew T. Levin — a professor of economics at Dartmouth College who served as an economist and advisor to the Fed’s board from 1992 to 2012 — urged Congress to step in and punish Powell for lying to lawmakers.

“A top Fed official cannot be permitted to make false statements under oath at a congressional hearing. Such statements must be promptly corrected, and in egregious cases, subject to censure by the Senate,” Levin said.

…The revelations are controversial at a time when the Fed is struggling with mounting losses, which stand at a total of $233 billion from the past three years.

Stay tuned. There may be some changes coming sooner than expected at the fed.

Admitting The Obvious

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I have stated my views of the Federal Reserve numerous times. It needs to go. For an explanation of why I believe this, please watch this video. It is long, but worth the watch.

If I had any doubts about the politicization of the Federal Reserve, those doubts were confirmed by an article posted at Breitbart on Tuesday.

The article reports:

The Fed chair (Federal Reserve Chair Jerome Powell) once warned against using speculative forecasts to drive policy. Now he’s doing exactly that.

Federal Reserve Chair Jerome Powell made a quiet but extraordinary admission on Tuesday: if the Fed were following the actual data, it would be cutting interest rates. But it isn’t—because the Fed expects President Trump’s tariffs to raise inflation, and it’s choosing to act on that forecast instead.

“If you just look at the basic data and don’t look at the forecast, you would say that we would’ve continued cutting,” Powell told lawmakers. “The difference, of course, is at this time all forecasters are expecting pretty soon that some significant inflation will show up from tariffs. And we can’t just ignore that.”

That’s a remarkable departure from the Fed’s longstanding mantra of data-dependence. It also reveals the extent to which the central bank is allowing anti-tariff bias—and speculative inflation models—to override clear economic signals pointing toward looser policy.

The data are, in Powell’s own words, favorable to a resumption of rate cuts. Inflation has come down meaningfully. We don’t yet have the personal consumption expenditure index reading for May, but Harvard economist Jason Furman’s calculation based on CPI is that the three-month annualized rate is around 0.6 percent for headline inflation and 1.4 percent for annualized inflation. The year-over-year figure is two percent for headline, exactly at the Fed’s target, and 2.5 percent for core inflation.

The article reminds us of some of Powell’s recent mistakes:

In some ways, Powell’s decision to ignore current data in favor of tariff-driven inflation forecasts echoes a costly Fed error from the recent past. In 2021, the Fed insisted that inflation was “transitory,” even as prices surged month after month. Officials were guided not by what the data showed, but by what their models predicted—that supply chain pressures would ease and inflation would naturally subside. It didn’t. And the Fed was forced to scramble, hiking rates aggressively in 2022 and 2023 to restore credibility.

Reducing interest rates at this point would help significantly in the recovery of America’s economy. After four years of inflation, lower wages, and slow employment growth, Americans are ready for the Federal Reserve to be a help rather than a hindrance.

Unfortunately, Inflation Is Still With Us

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On Thursday, Townhall posted an article about the current inflation levels.

The article reports:

Yet another inflation metric jumped in July, further debunking claims that inflation is in the rear-view mirror and reinforcing Federal Reserve Chairman Jerome Powell’s remarks earlier this month that additional interest rate hikes would be needed.

The latest Personal Consumption Expenditures (PCE) price index print released Thursday was in-line with expectations which were higher than previous reads.

Headline PCE inflation showed an increase of 3.3 percent year-over-year and Core PCE inflation — excluding volatile food and energy prices — increased 4.2 percent in the last year.

Compared to the previous release, headline and core PCE inflation increased 3.0 percent and 4.1 percent, respectively, showing that price increases continue to trend in the wrong, more expensive, direction. The July report also (again) debunks President Joe Biden’s wishful claims that inflation is “down.”

So what do higher interest rates mean for Americans?

Today’s fixed interest rate on a thirty-year mortgage is about 7 percent. If you have an $180,000 mortgage and put 10 percent down, your monthly payment at 7 percent (mortgage only) would be about $1,200. For the same down payment and loan amount, your monthly payment (mortgage only) at 3.5 percent would be about $800 (source here). That’s a difference of almost $5,000 a year. That impacts the housing market as well as the ability of young couples starting out to buy a house.

There is also the matter of payments on the national debt. As the interest rate is raised, those payments also go up.

Raising interest rates may slightly slow down inflation, but it will not solve the problem. Until someone deals with the runaway spending in Washington, we will have inflation. The other thing to note is that as the value of the dollar goes down because of inflation, payments on the national debt are made with money that is worth less than it was when the debt was incurred. The whole thing is a viscous circle where working-class Americans pay the price.

Incredible Coincidence?

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Yesterday The New York Post reported the following:

Federal Reserve Chairman Jerome Powell sold between $1 million and $5 million in stocks at the beginning of October 2020 — a month that turned out to be the worst for Wall Street since the beginning of the COVID-19 pandemic.

The transaction, which is noted on a public disclosure form Powell signed off on in May and was first reported Monday by The American Prospect, is an uncomfortable echo of activities that led to the recent resignations of two regional leaders of America’s central bank.

The disclosure form indicates that Powell sold the Vanguard Total Stock Market Index Fund shares on Oct. 1, 2020. Ten days earlier, a separate sale of shares from the same fund netted the Fed chair between $50,000 and $100,000.

As Powell played the market, he was calling on Congress to pass a second COVID-19 relief bill even as negotiations between lawmakers and the Trump administration were in a stalemate. The American Prospect, citing Powell’s public schedule, reported that he had spoken with then-Treasury Secretary Steven Mnuchin four times on Oct. 1, as well as with House Speaker Nancy Pelosi (D-Calif.).

The article concludes:

Separately, Bloomberg News reported on Oct. 1 of this year that Federal Reserve Vice Chairman Richard Clarida had moved between $1 million and $5 million out of one mutual fund and into two other funds on Feb. 27, 2020, the day before Powell signaled a potential interest rate cut due to the pandemic.

The disclosures have drawn the ire of Sen. Elizabeth Warren (D-Mass.), who wrote to the head of the Securities and Exchange Commission (SEC) earlier this month to ask for an investigation into whether Rosengren, Kaplan or Clerida had violated insider trading rules. In a Senate floor speech Oct. 5, Warren called out Powell and said he had “failed as a leader.”

However, other lawmakers have lined up behind Powell as President Biden nears a decision about whether to nominate him for a second four-year term that would begin in February. Fox Business Network reported Monday that at least eight Republican senators have said they would vote to confirm Powell for a second term.

The Federal Reserve did not respond to requests for comment about Powell’s transactions.

Mr. Powell’s biography notes that he is a lawyer who has worked in the investment banking field. I suppose this would give him the knowledge to make the kind of stock trade he made at the time he made it. However, I do think we need to take a really good look at the financial transactions of those in government. It seems as if there are a lot of people in government who seem to have an uncanny knack for buying and selling stock and stock options at exactly the right time.