so Washington can cheaply finance record debt, Waller says
We The Little People
&
our kids are about
to get hosed
By Jeffry Bartash
March 29, 2021
Newest Fed board member says
independence vital
Christopher Waller says the Federal Reserve
is not going to keep interest rates low to make it easier for the government to
finance it large and growing debt.
The newest member of the Federal Reserve
insists the central bank won’t fall prey to political pressure to keep interest
rates low to help the government cheaply finance its huge and growing debt.
“Deficit financing and debt servicing issues
play no role in our policy decisions and never will,” said Fed Governor
Christopher Waller in a speech to the Peterson Institute for International
Economics.
Waller, who joined the board last December,
said in his first public remarks the Fed’s actions “will continue to be guided
solely” by it legal obligation to ensure stable inflation and low unemployment.
“These congressionally mandated goals always
drive our decisions,” Wall said. “Partisan policy preferences or the
debt-financing needs of the Treasury will play no role in that decision.” Fed
Chairman Jerome Powell recently reiterated the same view.
Waller
said he chose to emphasize Fed independence in his first pubic remarks because
“a narrative has emerged” that the central bank will play second fiddle to the
U.S. Treasury. The Treasury under both Presidents Biden and Trump has sold
massive amounts of debt to underwrite some $5.8 trillion in stimulus spending
approved by Congress.
The Fed itself has purchased about $2.5
trillion in Treasurys during the pandemic to keep interest rates low and help
foster an economic recovery. Overall the Fed now holds a record $7 trillion in
U.S. public debt.
The close cooperation between the Fed and
Treasury harkens back to World War Two, the last time U.S. debt levels were as
high as they now as a percentage of the economy. The difference between now and
then is that the Treasury seized control over interest rates during the war and
didn’t give it back to the Fed until six years later after a bout of severe
inflation.
Political control over interest rates, Waller
said, has often led to misuse.
“When governments run up large debts, the interest cost to servicing
this debt will be substantial,” he noted. “Money earmarked to make interest payments could be used
for other purposes if interest rates were lower. Thus, the fiscal authority has
a strong incentive to keep interest rates low.”
Waller said it’s vital the Fed and Treasury
cooperate closely in times of crisis, but when the crisis is over, an
independent Fed has to
raise rates if necessary to squelch budding inflation even if it increases the
government’s borrowing costs.
Only an independent Fed can do that, he said.
“[T]he independence of the Federal Reserve is
in the nation’s best interest and should be valued and protected by all.”
Editor's note: The interest rate right now is
approximately 2% and $521 Billion
was wasted on interest payments last year; doubling the interest rate to just
4% will push the interest payment to over $1 Trillion. The Federal Reserve Bank and the Sycophants in Washington
D.C. have seriously hosed We The People.