The Fed claims they are “accountable to the public and the U.S. Congress.” But what good is accountability, if the public and Congress have little understanding of what the Fed does? Even worse, if no one has the power to stop the inflationary actions of the Fed, what good are the accountability measures in place?
This week, Chair Powell addressed Congress and provided the June Monetary Policy Report. The process of testifying before Congress is very much farcical because what the Fed says has no bearing on what the Fed does. We can assume few members of Congress actually understand monetary economics. But what if many of them did, as well as the general public, could the Fed really get away with all of this?
Reviewing the Chair’s testimony to Congress reveals how little the Fed and Congress know about economics and illustrates how ineffective testimony before Congress really is.
In his speech, Powell lists many of the lending programs (Paycheck Protection Program, Main Street Lending Program and Term Asset-Backed Securities Loan Program) but when it comes to corporate bond buying program, all he offered was:
To support the employment and spending of investment-grade businesses, we established two corporate credit facilities.
Like a teenager trying to hide purchases made on a parent’s credit card, he did not explicitly list the Primary and Secondary corporate credit facilities by name. He only said the two “corporate credit facilities,” the only two the Fed has. How issuing debt to corporations or trading their bonds on the stock exchange supports employment or spending is anyone’s guess. What does it matter anyway? Even if he said $750 billion may go to buy corporate bonds, who would stop them?
He moved from vagueness to deception quickly with the statement:
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