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WASHINGTON, DC – MARCH 15: US President Joe Biden speaks in the State Dining Room of the White House in Washington, DC on March 15, 2021. Gene Sperling, a former top economic official in the last two Democratic presidential administrations, will oversee the implementation of the $1.9 trillion coronavirus stimulus plan that Biden signed into law last week, according to the government. (Photo courtesy of Getty Images/Drew Angerer)
courtesy of Getty Images
The minutes from the most recent Fed meeting were released today, and there were no surprises.
They’re gently and painstakingly alerting us that the punch bowl’s bottom will not always be unlimited.
However, indicating a bottom/end to their QE forever program is far from hawkish, given that they expect the economy to grow at 7% this year, unemployment to fall to 4.5 percent (historically regarded as “full employment”), and inflation to run at 3.4 percent (right around the long-term average).
With this perspective, they should be ceasing emergency actions, if not rising rates right now, but they continue to press the monetary policy pedal to the metal.
As a result, the Fed appears to be a tool of the White House.
The White House and Congress are still planning and implementing fiscal excess (unabashedly growing the debt). And the Fed continues to inflate everything’s nominal price, as well as the value of debt.
We already know that a multibillion-dollar infrastructure investment is on the way. This will merely exaggerate the economy’s nominal growth and tighten the labor market even more. Nonetheless, Biden is out today promoting his “Build Back Better” plan, which includes a slew of new “relief” handouts.
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He asked for the extension of “child tax incentives” till 2025 today. This means that a family with an income of around the median will pay no federal income tax. And that isn’t even a credit. It is a one-time payment. It’s money. Those who do not pay taxes receive and will continue to receive direct payments, so it isn’t really a “tax” credit.
In the end, the “stimulus” of direct payments has been disguised as Covid relief, but it has always been a calculated move to push forward universal income. As a result, wages will continue to rise, resulting in labor shortages and inflation.
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