The Federal Reserve Chairman Jerome Powell had a lot to say this afternoon, including indicating the Interest Rate hikes announced earlier this year are still going to be implemented in the 4th quarter of 2018. Powell Suggested that “we have not seen a result of Trade Wars yet.” The big risk Federal Reserve Chief Powell stated this afternoon, at Dallas conference, was Global Growth expectations for 2019.
In addition, according to Bloomberg wire report, the Federal Reserve Chairman said the “we nailed the inflation target around 2%”, saying that the “US debt is unsustainable.” The Federal Reserve has a unique formula for calculating “inflation” — by not including daily consumer staples such as food, oil, and gas. Many consumer experts stated today that true inflation in the USA is actually near 6%, as food inflation and high gas prices this summer have hit wage-earners pocketbooks.
The key to Chairman’s Powell speech, as he agreed with President Trump on the matter of not forcing a Recession with Rate hike after Rate hike (Mortgage Applications down 3% this week) was the proclamation about the U.S. Debt which is now past $ 21 Trillion — and growing at exponential rate.
“U.S. Debt is Unsustainable”
The observation that the U.S. Debt is unsustainable could be an advance shot-across-the-bow for Federal Reserve critics, as every “interest rate hike” the Federal Reserve imposes, thereby automatically increases the Interest-on-the-Debt that the USA must pay every year, building upon the huge deficit spending program in Washington, DC.
Monetary Policy Remains — “It is Fiscal, not Monetary Policy to Blame”…
Powell defended the independence of the Fed but said it hasn’t been affected by the negative commentary directed at it by the Administration, which has called for less Interest Rate hikes.
“We have the tools to do it and we have the protections to allow us [to do it]”, he said of conducting monetary policy. As unelected officials, and a private corporation owned by member banks, Chairman Powell was defiant: “We don’t try to control things we don’t control, we try to control the controllable,” he said.
“Fed Speak” as it is now called by the business media, is now a tradition started by Chairman Greenspan, Chairman Bernanke, and Chairman Yellen — as President Trump is the first U.S. President of the last twenty years to actively comment on the influence of Federal Reserve Interest Rate policy may have on the booming economy. Of note, the Federal Reserve and Quantitative Easing “Money Printing” policy since the 2008 Financial Crisis, has ballooned the FED balance sheet to $4.5 trillion, and now monthly sales of assets purchased is in the billions — reversing the policy of “buying troubled assets” of Big Banks, Insurance Companies and Too-big-to-Fail institutions.
$ 21 Trillion Printed Worldwide by Central Banks
Central Banks worldwide have followed the Federal Reserve money-printing Monetary Policy initiated by Chairman Ben Bernanke after the 2008 Financial Crisis. To date, approximately $21 trillion USD worldwide, has been printed by Central Banks, according to research done by author Nomi Prins — “Collusion- How Central Banks Rigged The World” recently published, a key figure in Chase Manhattan, Goldman Sachs and other major Wall St. firms.
Japan and European Central Banks — Still Printing, Still Negative Interest Rates
While Chairman Powell announces a central bank Interest Rate increase this December, and a schedule of rate hikes in 2019 — the US Monetary policy is diverging from emerging markets. In 2018, China has experienced a major sell-off in their stock markets, and the Japanese Central Bank continues to promote negative interest rates — as well as their counterpart in Europe, the European Central Bank. While the US economy has boomed in 2018 to an average 3% GDP, emerging markets worldwide struggle. The Trade Wars, the Federal Reserve and the US Debt burden pose risk management issues for U.S. retirement investors as “volatility” is the now the norm.