Federal Reserve Chair Jerome Powell effectively told the Jackson Hole (virtual) bankers’ conference that the Federal Reserve will keep no higher than zero interest rates long years into the future; it will now take “average inflation of 2% over a period of time” as its target, rather than 2% inflation at any time, before considering changing rates from zero. He might as well have said zero forever as far as Wall Street and stock and bond traders are concerned, and of course Wall Street had more or less written in the change for him in advance. One financial journalist calculated this could mean zero rates until 2042, and wrote this several days ago, showing that Powell’s “surprise” policy change was known well in advance.
Such calculations are of course nonsense, and the speech was just a pledge to prop up the Wall Street banks and stock and bond markets indefinitely. Powell also said the Fed could let unemployment go below 4% without raising rates from zero, an absurdity in the present mass unemployment situation, which the Fed is determined to do nothing to change.
The Fed is now officially in pursuit of inflation higher than 2% in the consumer price index, and likely to get more, more quickly, than it expects.
On Aug. 25 former FDIC Commissioner Sheila Bair had slammed the Fed on Twitter for sharply increasing economic inequality in the country and doing the bidding of Wall Street. It is in no way deterred by such criticisms, and can be “changed” only by being nationalized, its governors replaced, and rechartered as a national bank for infrastructure and manufacturing.
Showing how absurd it is for Powell to moot “more than full employment,” the number of Americans on unemployment continues to decline, but slowly, and the total level is still a horror story as of early in August. “The total number of people claiming benefits in all programs for the week ending August 8 was 27,017,232, a decrease of 1,042,323 from the previous week,” said the Labor Department’s Aug. 27 release on unadjusted figures. Two weeks later, there were new claims made totaling “821,591 in the week ending Aug. 22, a decrease of 67,958 (or -7.6%) from the previous week.” So 800-900,000 new claims per week were filed in the two weeks since Aug. 8. This was probably less than the rate of hiring, so perhaps the total unemployment right now is about 25 million. To this must be added 7-8 million eligible workers who have dropped out of the labor force, and an equal number forced to work part-time. So real unemployment/underemployment is still in the range of 40 million, and none of the Fed’s so-called “Main Street Lending” facilities are even being used.
