The annual Jackson Hole, Wyoming, symposium of prominent central bankers marked its 45th year Aug. 25-27. It involved exploring “the emergence of economic constraints during the pandemic and how supply considerations have returned to center stage,” a press release noted.
Sponsored by the Federal Reserve Bank of Kansas City, the event is the world’s largest gathering of central bankers. There were 127 attendees from the US, the UK, Europe and elsewhere. Notable speakers included Agustín Carstens, who manages the Swiss-based Bank for International Settlements (BIS)—the rather obscure “central bank of the central banks.” Federal Reserve Chairman Jerome Powell was also among the 19 presenters and said the Fed once again is poised to “rescue” us all from inflation’s ravages.
He talked about former Fed Chairman Paul Volcker’s actions in the early 1980s to “tame the high inflation” coming out of the 1970s, a period being compared to the current inflationary trends.
“The successful Volcker disinflation in the early 1980s,” Powell also told his fellow bankers in Wyoming, “followed multiple failed attempts to lower inflation over the previous 15 years. A lengthy period of very restrictive monetary policy was ultimately needed to stem the high inflation and start the process of getting inflation down to the low and stable levels that were the norm until the spring of last year. Our goal is to avoid that outcome by acting with resolve now.”
However, retired Heritage College (Washington state) macroeconomics instructor Dick Eastman took strong issue with Powell’s remarks.
“As Fed chairman in the 1980s, Volcker tamed the inflation he himself caused earlier when he was president of the New York Federal Reserve Bank’s open-market operations. There, he started the late-1970s Carter-era inflation to deregulate banking and profitably undermine the savings and loan industry for the big players in finance.”
He added: “The inflation that he caused created a crisis for the Savings & Loans (S&Ls), which had home loans at 6% and paid their depositors 3%. That was killing them when the real interest rates climbed to double digits. S&Ls, in this crisis, turned to Congress [and obtained] junk bonds with a higher return, which was suicidal but kept them alive a little longer. Congress deregulated banking and enabled the giants to gobble up the small banks. Yet Powell portrays it as Volcker heroically stepping in.”
As for “the need for restrictive monetary policy” pushed by Powell, “Social Credit Economics” author Dr. Oliver Heydorn noted in a recent article that the whole idea of tightening credit by raising interest rates to “fight inflation,” an almost religious belief among bankers and economists, is flawed, since, in “cost-push” inflation—which, contrary to popular belief, is the most common form of price inflation, instead of “printing too much money that’s chasing too few goods” — higher production costs are typically pushed to the end consumer. Those costs run the gamut from electricity and other utility costs, to raw materials, property taxes, labor and interest charges on start-up and ongoing loans. So when banks boost the cost of credit for producers and retailers, via interest rate hikes, that morphs into higher consumer purchase prices.
Amid the often-intense disunity in society, it’d be especially helpful to come together and cure our economic infirmities. The lesson here is, since the economy could actually use more money in circulation (more money is not a major cause of price inflation) then perhaps it’s only a matter of the government constitutionally printing US notes (and no longer subcontracting government presses to print our central bank’s private debt notes) — much like what Abe Lincoln did during the waning days of the Civil War and the American colonists did before the Revolution. Perpetually borrowing at interest from the private banking system could, and should, be laid to rest, to our everlasting superlative benefit.
Ironically, what is not stated at banker meetings is what really matters.
Mark Anderson is a veteran journalist who divides his time between Texas and Michigan. Email him at truthhound2@ yahoo.com.
From The Progressive Populist, October 1, 2022
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