Fed Reserve Jerome Powell on the Economy
Federal reserve and Jerome powell
Will keep rates at near 0% to help the economy recover
They have applied all their resources in order to help prop up and stabilize the US economy and world economy.
Jerome Powell said they will do everything in their power to keep inflation around 2%. Now inflation comes from printing money. Hyper inflation comes from printing excessive amounts of money. When this happens you see a run up in the price of gold as worries the US dollar will collapse or lose value.
However, the Federal Reserves policies have kept the dollar stable and kept hyperinflation from running wild.
Keeping interest rates at near zero is the best way to keep inflation from getting out of control. For examples of hyper inflation we can use the country of Zimbabwee where their money literally lost value every single day and they were printing 1 trillion bills.
For an example of deflation look at Greece a few years ago where the price of everything went down as money as sucked out of the economy. Hair cuts went from $20-25 down to $5 and people couldn’t produce enough income from their labors. The country became bankrupt.
Jerome Powell said they will continue to act within their capacity as the reserve bank but need Congress to in-act policies that release money into the economy, AKA stimulus checks and stimulus relief aid. The stoppage of unemployment boost in July and President Trumps executive order running out of money, the need for stimulus, rental aid and unemployment have never been higher.
Jerome Powell wants to see unemployment return to under 5% before the Federal Reserve even thinks about increasing interest rates.
Jerome Powell said they will continue to support the markets and the economy until inflation returns to 2% for a regular amount of time. It’s not clear how many months they want to see inflation at 2%,but this is a good thing because with the amount of money the US printed and deployed compared to the amount of business and tax gathering they performed, we should have seen a major slump in the economy in all sectors.
Instead we are seeing unemployment drop below 8% which wasn’t expected until Summer of 2021 or later. Also with the economy GDP bouncing back at 33% and setting a new record high, this is also a sign that the economy is seeing a much quicker recovery than expected.
However, Jerome Powell, like many economists are saying that additional stimulus is need to fight off more people falling into poverty, the help those that are behind on rent and mortgage payments, those that are still unemployed and looking for work and those that need a little boost to stabilize themselves.
Jerome Powell said the Federal Reserve will continue to help with liquidity in the stock market and also in the real estate mortgage market so business and money can continue to flow through the US economy.
Remember the Federal Reserve is limited in their ability to help individuals in need. Being that they are a central bank their duty is to keep the economy operating and by supporting the monetary policies and procedures. It is Congress that needs to do more fiscal legislation to help the individual.
Jerome Powell has asked Congress to step up and get more stimulus relief to the American people as their hands are tied in this area. Powell pointed out that families and individuals that need help the most are the ones they can’t really help because their policies are on business and banking. It is for this reasons Powell has asked Congress to get a deal done because if people don’t have money, their lack of money will further hurt the economy and the Federal Reserves efforts.
Jerome pointed out that the greatest risk to the US economy is not handling the covid case rates so the economy can go back to some form of regular life.
Hopefully Congress as they meet again next week will listen to Jerome Powell and the other economists speaking out on the need for more stimulus.
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