View this email in your browser

**SEPTEMBER 22, 2021**

Kuttner on TAP

Translating Fed Chair Powell's Coded Messages to Biden

****

Fed Chairman Jay Powell, speaking at a press conference
today following the
release of a policy statement by the Fed's Open Market Committee,
aimed his remarks squarely if slyly at President Biden. Powell is
angling to keep his job, a decision Biden is expected to make very soon.

The Open Market Committee, made up of governors of the Fed and a
rotating cast of regional Fed bank presidents, seeks to target both
maximum employment and price stability. In the current context of a
still-depressed economy, the Fed has two basic tools-interest rates
and large purchases of bonds, a tactic that the central bank only uses
in emergencies.

The Fed has been purchasing $120 billion of bonds per month, and has
kept short-term interest rates close to zero. The Open Market Committee
statement suggests that the Fed will begin reducing its bond purchases
in October or November, and could raise interest rates beginning in late
2022.

Powell, however, took pains to locate himself on the dovish end of the
consensus, saying that he was not much concerned about inflation which
mainly results from temporary supply bottlenecks; and that labor markets
are not as tight as they might look, given the disruptions of the
pandemic. Message to Biden: Keep me as chairman, and I will give
priority to full employment and not get spooked by inflation.

Asked about the current vice chair for supervision, Randy Quarles, whose
term in that post expires next month, Powell responded that he'd be
fine with a new appointee who might have a different regulatory
philosophy than the very anti-regulation Quarles. Message to Biden: Go
ahead and appoint a liberal to replace Quarles, just keep me.

In all of this choreography and signaling, two realities get lost.
First, monetary policy is only one of the Fed's jobs. The other is
regulatory policy.

On monetary policy, Powell has been fine-as would any Fed chair in the
current circumstances. On regulatory policy, Powell has been as bad as
Quarles.

Biden has a chance to fix that, not by appointing a new vice chair for
supervision but by replacing Powell. Will Biden do that-or will
Powell's charm offensive win Biden over?

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

[link removed]

A Flood of Risk

The federal flood insurance program has historically subsidized rich
coastal homeowners. FEMA says they're fixing that, but it could be
false hope. BY LEE HARRIS

The Great Supply Shock We Brought Upon Ourselves

A half-century of neglecting fragilities in production and a confluence
of disruptions have brought us to this point. BY DAVID DAYEN

Let's Talk About Drone Strikes

After the attack that killed ten civilians in Kabul, there must be
accountability. BY ALEXANDRA STARK

To receive this newsletter directly in your inbox, click here to
subscribe. 

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM

The American Prospect
IDEAS, POLITICS & POWER
The American Prospect, Inc.
1225 I Street NW, Suite 600
Washington, DC xxxxxx
United States
Copyright (C) 2021 The American Prospect. All rights reserved.

To opt out of American Prospect membership messaging, click here
.

To manage your newsletter preferences, click here
.

To unsubscribe from all American Prospect emails, including newsletters,
click here .
_________________

Sent to [email protected]

Unsubscribe:
[link removed]

The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States