If cringeworthy were a letter, read what Ohio Senator Sherrod Brown (D) wrote to Federal Reserve Chair Jerome Powell (R). In my opinion, everything contained in the letter comes from a place of selfishness, entitlement, and employs little use of reason. The demagogue thrives on appeals to emotions and the use of ill defined or hollow economic verbiage, regardless of political party.
Written on the letterhead of the United States Senate Committee on Banking, Housing, and Urban Affairs, he begins by reminding Powell of the Fed’s dual mandate:
As you know, the Federal Reserve is charged with the dual mandate of promoting maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy.
Titled dual mandate, yet at some point became tri-part, where the Fed is additionally tasked with “moderating” interest rates. Senator Brown follows:
It is your job to combat inflation, but at the same time, you must not lose sight of your responsibility to ensure that we have full employment.
On one hand, Jerome Powell is supposed to create (money and price) inflation. On the other, he must aim to control prices once they exceed a metric in which he deems unacceptable while also ensuring that “maximum employment,” a bizarre negative right, is reached.
Their method to lower prices is explained:
The Federal Reserve’s tools work to lower inflation by reducing demand for economic activities sensitive to interest rates.
What exactly these sensitive economic activities are, or how they are measured, is not detailed. There is also a noticeable tactic of acknowledging problems, then looking past rational solutions in favor of something less sophisticated, per below:
Upper-income households are better able to protect their wealth during economic downturns … lower income families have fewer resources to mitigate unemployment and less wealth to accumulate assets and realize gains during an economic recovery. Due to this disparity, inflation and recessionary job losses increase the gap between upper- and lower-income households…
It is true that wealthier individuals are better insulated from currency debasement. They have more assets. Artificial booms created by the Fed benefit those with a higher net worth since, traditionally, they have cheaper and easier access to the new monetary inflation. The ability to access credit for the purpose of business loans or placing leveraged stock market bets is much easier for those in the “upper-income” bracket than for “lower-income” households. Yet the Senator doesn’t seem to fathom the idea that it is the Fed’s monetary creation causing widespread price increases, recessions, and economic booms.
At last, it’s declared:
We must stay focused on addressing the root causes of inflation without putting workers’ livelihoods at risk.
As explained:
…the United States and the world are still feeling the effects of a supply and demand imbalance from the pandemic. Russia’s illegal invasion of Ukraine has driven energy costs up, affecting food, transportation, and other sectors. Big corporations in concentrated industries have exploited this inflationary environment, increasing consumer costs and earning higher profit margins than before.
He mentions the Inflation Reduction Act, which in his own words “initiates fiscal action to strengthen the economy,” by way of various market interventions including new tax credits. Then he concludes by reminding Powell to continue following the dual mandate.
Reading a letter like this illustrates how far from reason, dignity, and honesty society has strayed. In this case, we find a senator seemingly not embracing any capitalism writing a letter to the head of an organization whose sole existence is anti-capitalistic. When everything goes predictably wrong, expect more socialist policies. They will never arrive at the answers society needs. Only a free and unhampered market can offer the best and most fair solutions to our economic woes.
