During a Q&A with students and teachers, Federal Reserve Chairman Jerome Powell praised the bad economics that drove the government response to the coronavirus pandemic. In this clip from his podcast, Peter Schiff breaks down everything Powell got wrong.
During the Zoom event, Powell went out of his way to praise Congress for passing the “CARES Act.” The Coronavirus Aid, Relief, and Economic Security Act was the first $2.2 trillion stimulus plan Congress passed in response to the pandemic back in March 2020.
So, why does Powell admire this massive government spending plan?
He said that Congress was able to replace the income Americans lost as they were out of work due to the pandemic. As Peter pointed out, the plan not only replaced lost income, they augmented it.
[embedded content]“A lot of people were getting more money not working than when they earned money for working.”
But Powell missed an important point.
“Congress was able to replace the income that people lost, but it wasn’t able to replace the productivity that was lost.”
When people aren’t on the job working, they aren’t producing any goods or services. The government cannot replace that lost production. And income is supposed to be tied to production.
“You help produce goods and services, and in reward, you get money. And now you can use that money to consume the goods and services that you produced.”
Of course, you don’t consume the exact products you produce. But your production still adds to the overall basket of goods available. Peter explained it this way.
“When you’re working, you’re helping to fill up a bag with goods and services, and then you get paid. And now you have the right to reach into that bag and grab some of the goods and services that you helped produce. But when all these people didn’t go to work, they stopped putting stuff into the bag. But now the government gives them all this money so they can reach into the bag and grab stuff anyway. But if no one is putting stuff into the bag, and everybody is reaching into the bag to grab stuff, they’re going to end up empty-handed.”
Ultimately, consumers end up paying higher prices for the remaining goods in the bag because we have all of this money chasing fewer goods and services. Prices get bid up, and we end up with a rising cost of living.
Powell doesn’t seem to understand the difference between replacing money and replacing real productivity.
“It’s the stuff. It’s the things that are produced that we need.”
Meanwhile, Powell’s Fed added even more money to the economy through its massive quantitative easing program. As Peter put it in another podcast, you can print money, but you can’t print stuff. As production fell during the pandemic, the proper monetary policy would have been to withdraw money from circulation.
“It needs the money supply to shrink alongside the supply of goods to maintain prices. If you increase the supply of money while you’re simultaneously decreasing the supply of goods, prices are going to soar, which is exactly what we’re experiencing right now.”
Peter said Powell should not be praising Congress for doing the wrong thing.
“They should be condemned, as should the Federal Reserve for being complicit in this activity.”
Furthermore, the stimulus and bailouts enabled the federal government to enact policies the public would never have accepted if they had to bear the consequences. As the pandemic unfolded, President Trump invoked images of sacrifice during the Second World War. It’s certainly true Americans sacrificed during the war, but they didn’t get a government bailout.
“Trump didn’t ask anyone to sacrifice. He said, ‘Hey, stay at home and we’ll send you a check. If your business is suffering, don’t worry. Get a PPP loan – a forgivable loan. We’ll give you some money.’ That was not the proper policy response to an emergency. If we really had a pandemic, if we really had a health crisis, then obviously people need to bear the financial consequences of that crisis. It’s not a good thing, but it’s reality. But what the government did is try to pretend that nobody actually had to suffer because the government can make everybody’s pain go away simply by printing money. Well, they didn’t make the pain go away. They actually exacerbated the pain. They just kicked the pain down the road a bit. And so now we’re finally starting to catch up with that pain.”
Sean M. Brooks of AmericanEducationFM.com joins The Alex Jones Show to break down how to fight back against medical tyranny.
source https://www.infowars.com/posts/fed-chair-praises-bad-economics-amid-covid-pandemic
Post a Comment