Peter Schiff, an economist, has expressed harsh criticism towards Federal Reserve Chairman Jerome Powell for overlooking several crucial matters related to the U.S. economy, banking system, and the U.S. dollar. Schiff accused Powell of failing in his duty and ignoring a number of significant economic factors during his recent congressional testimonies.
Peter Schiff Voices Disagreement With Fed Chair Powell on Multiple Essential Topics
The economist, who is known as a gold enthusiast, has questioned several statements made by Federal Reserve Chairman Jerome Powell during his presentations to the House Financial Services Committee and the Senate Banking Committee this week. Powell presented the Federal Reserve’s semiannual Monetary Policy Report to Congress.
In a series of tweets posted over the past few days, Schiff voiced his disagreement with Powell’s comments. Schiff tweeted:
Powell acknowledged the concern about the Fed’s expanding balance sheet, but neglected to address the core issue of the unceasing growth of the balance sheet, which occurs every time an economic or financial challenge emerges, leading the Fed to push the balance sheet to unprecedented levels.
Additionally, Schiff emphasized in a subsequent tweet: “Powell’s claim that a robust labor market is driving the economy is incorrect. In reality, a sluggish economy and declining real wages are leading more employees to take up additional jobs, while inflation is compelling retirees to re-enter the workforce to cope with increasing living costs.”
In another tweet, Schiff pointed out that although the Federal Reserve chairman “blames the global pandemic for high inflation rates across numerous countries,” he fails to recognize:
The crucial shared factors are artificially depressed interest rates, quantitative easing, and government deficit spending.
The economist also highlighted that Powell disregarded the Federal Reserve’s “substantial bond portfolio losses, claiming they are merely paper losses.” Schiff countered: “That’s nonsense. Additionally, the Fed is paying more on deposits than it’s earning on Treasuries. These losses are tangible. The bills are passed onto the U.S. government, thus becoming burdens on taxpayers.”
Regarding Powell’s repeated assurance to senators about the soundness and resilience of the U.S. banking system, Schiff argued: “The reality is that due to Fed monetary policy and federal government intervention, subsidies, and regulation, the U.S. banking system is insolvent and would have failed without government support.” Schiff had earlier issued a similar warning about the destructive impact of the Fed on the banking system.
Schiff also responded to U.S. Senator Elizabeth Warren’s comments on the banking system. He agreed that “our banking system is broken,” but disagreed with her about who is responsible. The economist clarified: “The issue is not a lack of government regulation, but an excess of it. What’s required is to disengage the government and the Fed from the U.S. banking system and allow market forces to take over.”
Schiff further remarked: “Powell’s claim that increased government spending stimulates the economy is incorrect. It does not boost the economy; it actually hampers it. What it does stimulate is spending and inflation. But the Fed Chairman lacks a solid understanding of economics. He’s a Keynesian.” He added:
Former Fed Chair Paul Volcker consistently urged Congress to reduce spending or increase taxes, strongly denounced federal deficit spending, warning it would suppress economic growth and result in higher long-term interest rates and inflation. Powell lacks courage. He is not performing his duty.
Schiff also disagreed with Powell on the matter of the U.S. dollar. The Fed chairman stated that the USD’s global reserve currency status is a result of America’s economic dominance. Schiff contended: “Powell is mistaken. While the dollar’s reserve currency status was initially due to America’s economic dominance, it is now the principal support of that dominance. If the dollar loses its reserve status, U.S. economic dominance will crumble.”
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Frequently Asked Questions (FAQs) about Peter Schiff Criticism of Jerome Powell
Who is the economist criticizing Fed Chair Jerome Powell in this article?
The economist criticizing Fed Chair Jerome Powell in this article is Peter Schiff.
What are the main issues Peter Schiff has with Fed Chair Powell’s economic policies?
Peter Schiff criticizes Powell for neglecting key economic factors, for his handling of the Federal Reserve’s balance sheet, for misjudging the strength of the labor market, for not considering the impact of low interest rates, quantitative easing, and government deficit spending on inflation, and for claiming that the Federal Reserve’s losses on its bond portfolio are not real.
How did Peter Schiff express his disagreement with Powell?
Peter Schiff expressed his disagreement with Powell through a series of tweets over the past couple of days.
What is Peter Schiff’s view on the U.S. banking system?
Peter Schiff argues that thanks to Fed monetary policy and federal government interference, subsidies, and regulation, the U.S. banking system is insolvent and would have failed without government support.
Does Peter Schiff agree with the statement that the USD’s status as the global reserve currency is due to America’s economic dominance?
No, Peter Schiff disagrees with this statement. He argues that while the dollar’s reserve currency status was initially due to America’s economic dominance, it has now become the main support of that dominance. He believes that if the dollar loses its reserve status, U.S. economic dominance will crumble.
More about Peter Schiff Criticism of Jerome Powell
- Peter Schiff’s Twitter
- Federal Reserve
- Jerome Powell’s Congressional Testimonies
- U.S. Monetary Policy Report
- Information on the U.S. Banking System
- Understanding the U.S. Dollar as a Global Reserve Currency