Powell reminds nation that its debt is looming
Federal Reserve Chairman Jerome Powell, unlike his predecessors, believes that the language he uses to talk about economic matters should be fairly straightforward so that citizens can understand him. He decries what he describes as “irritating” insider language. Good for him. We like his approach.
While many, of course, are obsessed with Powell’s reaction to comments President Trump makes about the Federal Reserve and its decisions in setting interest rates, Powell made clear Thursday that the Fed is not a political institution, and not influenced by politics. Rather, it has a job to do, centered on two things: keeping inflation in check while maximizing employment.
“We are very focused on our job,” Powell says. “We don’t get distracted.”
He believes the U.S. economy is humming along and he sees no looming recession. He does have concerns about the strength of the global economy. And he believes the trade war with China could be beneficial, if it leads to free trade. Or it could be detrimental, if trade barriers become permanent.
But perhaps the most important thing Powell talked about Thursday is a topic that the mainstream media ignore, that on-the-rise socialists on the left ignore, that recipients of government entitlement programs ignore, that politicians ignore. Namely, the nation’s debt, and annual budget deficits, which are not sustainable. Powell says the U.S. does have serious short- and medium-term issues to tackle, but the nation is in serious trouble if it does not address the long-term problem of the debt.
How the problem is mitigated or solved is a political question, and even politics cannot escape reality forever. Politicians over-promise because citizens like free goodies from “the government,” without realizing that “the government” is all of us. And none of us has ever seen a tree on which money grows.