Continuity at the FED: Powell confirmed, for now….
Biden, in a short statement, confirmed Jerome Powell at the helm of the FED, placing him as second Lael Brainard. The nomination will have to be confirmed by the Senate, where Elizabeth Warren, the aggressive Democrat, has already said she will vote against.
My statement on the Federal Reserve nominations: pic.twitter.com/W8FgAJdj2e
– Elizabeth Warren (@SenWarren) November 22, 2021
The Nomination of Brainard is important because, in the event of Powell's resignation, he would be the first in order of succession. With inflation on the rise and problems also from the point of view of unemployment, which struggles to return to the levels of 2019, it is not impossible that Powell could be forced to resign in 2022. Whether the next year there is an excessive economic slowdown or not if growth targets were met in the presence of high inflation, then his place would be in jeopardy.
Because the challenge facing Powell is anything but simple. The market is mainly based on the debt monetization activity linked to the Fed's QE, but if this measure pushes inflation that is not temporary, but in the medium term, then the situation changes completely. Without stable income growth, inflation will cut the purchasing power of American citizens, laying the basis for a reduction in consumption which, over time, will crack growth and lay the foundations for a real economic crisis. The same happened in 1929, when industrial investments laid the foundations for mass production which, however, could not be absorbed by a market of insufficient size. So the investments practically destroyed themselves and the already present bubble burst.
So Powell has been confirmed, but it is not said to be forever …
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The Continuity article at the Fed: Powell confirmed, for now…. comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/continuita-alla-fed-powell-confermato/ on Tue, 23 Nov 2021 07:30:02 +0000.