By Mark Anderson
The 43rd Jackson Hole Economic Policy Symposium, held as always at Jackson Lake Lodge in Grand Teton National Park under the auspices of the Kansas City Federal Reserve branch, was the scene of the near climax of Fed Chairman Jerome Powell’s confounding dilemma: will he raise interest rates to try to control inflation?
Click the Link Below to Listen to the Audio of this Article
That core question—amid fleeting remarks concerning Wall Street’s reaction to this central bankers’ meeting and how President Donald Trump’s tariffs might affect the economy—dominated the legacy media cartel’s reports going into the Aug. 21-23 symposium.
The decision over whether an interest rate change might be enacted was deferred until September.
Financial news website “Investopedia,” just before the symposium—where the invited media is limited to those outlets that don’t ask too many probing questions—published the standard conceptual policy framework under which this event was conducted:
- Central banks cut interest rates when the economy slows down to encourage economic activity and growth. [Conversely], the Federal Reserve (the Fed) raises rates when prices are rising, to limit inflation;
- The goal of cutting rates is to reduce the cost of borrowing so that people and companies are more willing to invest and spend; and
- Interest rates and inflation have an inverse relationship, [meaning] that low rates lead to high inflation.
FUNDAMENTAL FALSEHOODS
Those three points prompt one to recall the saying, “real eyes realize real lies.” Regarding the last point, interest rates and inflation do not typically or consistently have an “inverse relationship.” That claim constitutes the core of the entire national and world financial charade—made all-the-more manifest at the Jackson Hole confab—where the myth that raising interest rates invariably reduces prices is treated as holy writ.
Powell, the rest of the Fed, and central bankers worldwide exploit that myth to enable their grand swindle. Accordingly, it’s vitally important that people clearly understand inflation and that there are two kinds of it:
- Demand-pull: Excessive currency is printed and circulated to a point where the amount floods the economy and exceeds productive output, bidding prices upward by making each dollar worth less; and
- Cost-push: The dominant kind of price inflation, wherein supply disruptions and other things that affect the costs of doing business—those costs being interest charges, taxes, raw materials, especially higher energy costs for obtaining and moving such materials, utilities, labor costs to pay employees etc.—are wholly, or in part, passed on to the end consumer.
The bottom line is that interest hikes for business loans and for lines of credit that fund production are another cost passed on to the consumer.
For the Fed to always bank on the notion that raising rates fights price inflation means the Fed is absurdly adopting inflation to fight inflation, Canadian monetary analyst and author Oliver Heydorn remarked when contacted Aug. 24 by AFP. Heydorn was preparing for a Quebec monetary-reform conference on “economic democracy,” based on the studies of British monetary reform author C.H. Douglas.
While “Investopedia” accurately noted that cutting interest rates—making the money-rental charges paid by the public, businesses, and the government cheaper—encourages some “economic activity and growth,” the very existence of these rental (interest) charges at whatever level, in a world where all money is born as debt, is ultimately a losing proposition.
Merely tweaking the rates is only of limited utility, yet the Fed, like a doctor prescribing differing doses of the same medicine with nothing else to offer, acts as if it has all the answers.
POWELL’S REMARKS
In his anticipated Aug. 22 Jackson Hole speech, Powell noted:
Over the course of this year, the U.S. economy has shown resilience. … In terms of the Fed’s dual-mandate goals, the labor market remains near maximum employment, and inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs.
That dual mandate, consisting of the Fed’s enduring twin myths—that lower rates automatically mean lower prices and seeking full employment makes sense against increasingly automated production—is a misleading mandate of control, not economic betterment. In the same context, Powell continued:
Upside risks to inflation had diminished. But the unemployment rate had increased by almost a full percentage point, a development that historically has not occurred outside of recessions. Over the subsequent three Federal Open Market Committee meetings, we recalibrated our policy stance, setting the stage for the labor market to remain in balance near maximum employment over the past year.
As one chisels the veneer atop the Fed’s double-talk, the disingenuousness of its statements looks like pig iron emerging from beneath a razor-thin cladding of fool’s gold.
The Fed’s rate increases, contrary to the financial pages that worshipfully quote the Fed, are, in the main, actually a cost passed on to consumers in the form of higher prices—not a mechanism to lower prices, occasional instances to the contrary notwithstanding.
And the Fed’s employment goals, while they may keep a percentage of employable Americans working, will do little more than keep them on a perpetual treadmill, working their lives away as the Fed fails to fix the burdensome, systemic financial flaws the Fed itself helps create.
Fresh policies based on reality, if ever allowed to see the light of day, could free the economy from such false-option mandates.
