Tag: Interest rates

Jerome Powell: The Name All Libertarians Should Remember

By Michael McCosker | United States

Jerome Powell sounds like he could be the head of your local home owners association or the banker that works off your main street. Jerome Powell, however, is not that person. Powell is a name that all Libertarians should remember at least until 2028. Jerome Powell is important to know because he is the current Chair of the Federal Reserve. With his Chair term ending in 2022, and his position on the Federal Reserve Board of Governors ending in 2028, the American people will feel the effects of Jerome Powell’s leadership for years to come.

Most Libertarians may have just lost interest once the Federal Reserve was mentioned, due to the fact that as a “central bank,” the Reserve is a monopoly and has control of the American financial system, and is enforced by government violence. However, it is important to understand the present head of the Federal Reserve, so that we may understand where investment opportunities lie.

Jerome Powell was both a lawyer and banker for 32 years, in which he managed several funds. Most recently, he managed the Global Environment Fund, a private investment firm that invests solely in sustainable energy. (1)( 2) Powell served for three years as the Under Secretary of the Treasury for Domestic Finance under George H. W. Bush, in which he was responsible for fishing out and purging corrupt and illegal business practices of the Salomon Brothers bank. (3)  One of his most notable achievements is that he was the first person supported by the opposition party since 1988, with President Barack Obama nominating Powell, a known Republican. (4)

In a 2013 speech, Powell made a speech in which he spoke about ending “too big to fail,” a policy in which the federal government promises to financially prop up businesses whose closure would be possibly catastrophic to the American economy. (5) Powell has also voiced his displeasure with Fannie Mae and Freddie Mac, publicly traded government agencies that specialize in selling debt by way of mortgages to the American people, saying that their current methods are “unsustainable.” (6) Despite the fiscally conservative stance that Powell often takes, he is in favor of most of the Consumer Protection Act, the Obama era response to the 2008-2009 economic collapse, although Powell believes to “do it more efficiently.” (6)

What does all this mean? Yes, most of this does seem like random irrelevant information, but it is important.

Powell is a Republican, but he is the worst kind and the biggest threat to Libertarian beliefs. Powell plays both sides of the aisle, and he truly believes that both sides have something to offer. Libertarians, while sharing some beliefs with either side, should acknowledge that both Republicans and Democrats both seek the same end, and that is the further enslavement of the American people by means of increased taxation, increased inflation, and an increase in the number of laws in effect. Powell, being the Chairman of the Federal Reserve has the ability to raise and is in favor of raising interest rates, as he did three times in 2017. (7)

While I am not an investment specialist of any kind, it is easy to understand that the continued devaluation of the American dollar makes investing into any sort of commodity or crypto-currency during this financial period appealing.

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Central Bankers are Losing Control, and They Know It

By Vaughn Hoisington | USA

For years, the U.S. Federal Reserve has partaken in quantitative easing in an attempt to keep the market stable and keep inflation at the intended rate. These large asset purchases by central bankers have tended to maintain control of the stock market by using Keynesian tactics, but with the central bank asset purchases set for 2018 being the lowest of the decade, Citi’s Hans Lorenzen believes control of the stock market will be lost.

The low stimulus package isn’t the only red flag Lorenzen sees. The nearly historic low volatility has maintained its level for longer than ever, while “more risk than ever before is being issued into a credit market where spreads, on a like-for-like basis, are close to the 2007 tights and where breakevens are wafer thin.” These are just some of the reasons that the Citibank strategist views 2018 as being a very vulnerable year for a mid-cycle, technical correction.

Lorenzen stated that removing policy accommodation at a rate that wouldn’t cause a chain-link reaction of market backlashes “seems to be a growing fear among a number of central bankers that we have spoken to recently. In our experience, they too are somewhat baffled by the lack of volatility and concerned about the lack of response to negative headlines…. Our guess is that sooner or later in the process of retrenchment they will end up going too far – though that will only be obvious with hindsight.”

The central bank asset purchases are no longer stimulating the market, they are only prolonging the inevitable crash. “the longer we remain in the current paradigm, the greater the chance that it ends up being both sharp and painful.”