"Inequality is something that's been with us increasingly for more than four decades and it's not really related to monetary policy. It's more related to - there are a lot of theories on what causes it - but it's been something that's more or less going up consistently for the last four decades. And there are a lot of different theories."
- Jerome Powell, Chairman of the Federal Reserve, June 10th, 2020
The fearless leader of the stock market, Jerome Powell, held a press conference after yesterday's Federal Open Markets Committee meeting in which he directly denied that easy monetary policy is a leading cause of income inequality. Apparently there are other theories about the causes of income inequality and they are more accurate.
This year has been a pivotal year in human history for many reasons, but one that has been underscored is the dismantling of the facade of legitimacy the Fed has been hiding behind for decades. In early April we highlighted the fact that normies are beginning to question the Fed by comparing the USD to Schrute Bucks due to an increase in money printing. A moment in pop culture that signaled to your Uncle Marty that people who otherwise don't pay attention to the Fed and its policies were beginning to think about the impact of monetary policies on the purchasing power of their money. Earlier this week, we witnessed another instance of someone beginning to question the money printing when popular comedian Andrew Schulz mentioned that he is concerned about it on the Joe Rogan Experience.
And now we have Jerome Powell coming out and flat out denying that Fed policy has anything to do with the growing inequality we've seen throughout our society over the last four decades (immediately following our complete departure from a gold standard). As our boy Melik points out, "never believe anything in politics until it has been officially denied." I was honestly a bit shocked to see that Chairman Powell even broached this subject. His overt denial was not surprising in the least bit, but by appeasing the question of whether or not the Fed's monetary policy has been a driver of inequality he has planted a mind seed. A seed that will have individuals - who are increasingly beginning to lose faith in the institutions that rule over our society - asking the question themselves and seeking answers elsewhere.
Unfortunately for Chairman Powell, these individuals who seek answers elsewhere will come to learn that he is dead wrong. The Fed's easy monetary policy that has persisted for more than four decades has directly contributed to exploding inequality throughout our society. Our good friend Jeff Booth explains why in the thread below (there's more than is shared below, go read the rest when you get a chance).
The Fed has incited a nonsensical mad dash for inflation that is fighting against the natural forces of price deflation afforded to us by advances in technology and other sectors. The chase for inflation leads to higher taxes and less jobs, which has created a dangerous feedback loop that has led us to the extreme polarization we are currently watching play out across the world. As Jeff points out, this is a losing battle because price deflation has only just begun in earnest. It will become more prevalent moving forward as technology continues to make advances that make us more productive.
The fucked up thing is that the Fed wants us to believe that this is a bad thing. Being able to buy more with your money over time is BAD in the eyes of the Federal Reserve. This is completely asinine. The only reason they "believe" this is because admitting that the opposite is true would prove that their policies have been completely misguided for many, many decades.
A world filled with price deflation driven by advances in technology does not work well with an inflationary money. These deflationary pressures should be paired with a sound money like Bitcoin. This is the way we break free from the terrible feedback loop that is tearing society apart at the seams.
Fix the money, fix the world.
Been on a big Jack Johnson kick this week.