Economist Peter Schiff has slammed Federal Reserve Chairman Jerome Powell over several key issues concerning the U.S. economy, the banking system, and the U.S. dollar. “Powell is a coward. He is not doing his job,” Schiff claimed, highlighting multiple factors affecting the economy that the Fed chairman overlooked in his statements before Congress this week.
Peter Schiff Disagrees With Fed Chair Powell on Several Key Issues
Economist and gold bug Peter Schiff has criticized multiple statements made by Federal Reserve Chairman Jerome Powell during his appearances before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday. Powell appeared before Congress this week to present the Federal Reserve’s semiannual Monetary Policy Report.
Schiff expressed his disagreement with Powell’s remarks through a series of tweets over the past couple of days. In one tweet, he wrote:
Powell acknowledged that the Fed’s growing balance sheet is a concern, but failed to address the primary challenge that the balance sheet will never stop growing because every time an economic or financial problem arises, the Fed quickly expands the balance sheet to new highs.
Furthermore, the gold bug stressed in a follow-up tweet: “Powell is wrong to claim that the economy is being driven by a strong labor market. A weak economy and falling real wages are driving more workers to seek second and third jobs, and inflation causes retirees to return to the labor force to keep up with a rising cost of living.”
Schiff detailed in another tweet that the Federal Reserve chairman “claims the common factor that explains why so many countries are now experiencing high inflation is the global pandemic.” However, he pointed out:
What he overlooks are the far more relevant common factors of artificially low interest rates, quantitative easing, and government deficit spending.
The economist added that the Fed chair stated that the Federal Reserve’s “massive losses on its bond portfolio don’t count, as they’re just paper losses.” Schiff exclaimed: “That’s BS. Plus, the Fed pays more on deposits than it earns on Treasuries. Those losses are real. The bills are sent to the U.S. government and become obligations of taxpayers.”
Commenting on Powell reiterating his assurance to lawmakers during his Senate hearing that the U.S. banking system is sound and resilient, Schiff stressed: “The truth is that thanks to Fed monetary policy and Federal government interference, subsidies, and regulation, the U.S. banking system is insolvent and would have collapsed without government backstops.” Schiff similarly warned earlier this month that the Fed is destroying the banking system.
The gold bug also commented on U.S. Senator Elizabeth Warren’s statements regarding the banking system. He said that while the senator from Massachusetts “is correct that our banking system is broken, she is wrong about who broke it.” The economist explained: “The problem is not too little government regulation, but too much. What we need is to get the government and the Fed out of the U.S. banking system, to allow free market forces back in.”
Schiff further stated: “Powell is wrong to claim that increased government spending stimulates the economy. It doesn’t stimulate the economy, it actually stifles the economy. What it stimulates is spending and inflation. But the Fed Chairman doesn’t really understand economics. He’s a Keynesian.” He opined:
Former Fed Chair Paul Volcker repeatedly advised Congress to cut spending or raise taxes, sharply criticized Federal deficit spending that he warned would stifle economic growth, lead to higher long-term interest rates and inflation. Powell is a coward. He is not doing his job.
Another area in which Schiff disagreed with Powell concerns the U.S. dollar. The Fed chairman told lawmakers that he believes the USD’s status as the global reserve currency is a consequence of America’s economic dominance. Schiff argued: “Powell is wrong. The dollar’s reserve currency status was originally a consequence of America’s economic dominance, but it has since become the main prop upon which that economic dominance now rests. Once the dollar’s reserve status is lost, U.S. economic dominance will topple.”
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https://news.bitcoin.com/economist-peter-schiff-slams-fed-chair-over-economic-concerns-claims-powell-overlooks-far-more-relevant-factors/
