Wednesday 22 June 2022 08:26 PM Fed chair Powell wants to 'get back' to Trump economic era and we agree: ANDY ... trends now
Andy Puzder is a former CEO of CKE Restaurants, chairman of 2ndVote Value Investments, Inc., and a senior fellow at the America First Policy Institute.
Jim Talent is a former U.S. senator from Missouri and the Chairman of the Reagan Institute's National Leadership Council
'The labor market we had before the pandemic... that's what we want to get back to.'
So said Federal Reserve Bank Chairman Jerome Powell last week following his announcement that the Fed is raising its benchmark interest rates three-quarters of a percentage point – the most aggressive hike in 28 years.
With inflation surging, it's little wonder he's nostalgic for a time when inflation was low, unemployment was at historic lows, labor participation was increasing, and real wages were increasing faster than inflation.
In short, Powell wants to return to the conditions which prevailed during President Donald Trump's Administration before the pandemic.
Of course he does; as of today, his stewardship at the Federal Reserve is an epic fail.
The Fed's major job is to protect against inflation, which last month was officially 8.6% but was actually much worse.
Unlike most Americans, Powell knows that the official figures dramatically understate the price increases that consumers are facing.
If inflation were determined using the same methods the government used during the Carter years, it would be well into double digits.
Powell (right) wants to return to the conditions which prevailed during President Donald Trump's (left) Administration before the pandemic
Meanwhile, President Joe Biden continues to bemoan his inability to stem the inflationary tide.
In reality, there is much he could do to reduce inflation.
He could start by following the medical profession's maxim – First, do no harm.
The best short-hand definition of inflation is 'too much money chasing too few goods.'
To reduce inflation, the government needs to curb the amount of money it is injecting into the economy (the 'too much money') while increasing the economy's capacity to produce commodities like fuel and food ('the too few goods').
Treasury Secretary Janet Yellen got at least the first part right when she testified before the House Financial Services Committee in November when she said that 'Inflation is a matter of demand'.
Chairman Powell made the same point stating that 'the path (to 2% inflation) is to move demand down.'
It would have been nice if Yellen and Powell had discovered the danger of too much demand last year when the Democrats in Congress were borrowing and spending trillions of dollars.
In retrospect, Yellen testified that 'it was extremely' hard to know whether that stimulus was necessary.
In fact, it wasn't hard for people like former Clinton and Obama economists Larry Summers, Jason Furman and Steve Rattner (among others) - who warned that such spending was inflationary.
In any event it shouldn't be difficult now for Yellen to understand that infusing even more money into the economy – further juicing demand while the Fed is simultaneously increasing interest rates to drive it down – obviously makes no sense.
Nonetheless, Congressional Democrats continue to push for a revised version of his Build Back Better big government spending plan.
Assuming Yellen is aware of the danger of those spending plans, she should inform her
