The U.S. government is displaying a level of incompetence that is now reaching a tipping point, and I fear for the well-being of America’s working class, which continues to struggle even while politicians claim that the economy is healthy.
46% of American workers made less than $30,000 last year, and 44% of U.S. consumers don’t make enough money to cover their expenses!
Don’t count on your elected officials to come up with a solution to all of this, assuming that they actually want to solve the problem.
For the latest evidence of the government’s cluelessness, go back and watch the almost comedic performances of Maxine Waters, Alexandria Ocasio-Cortez, and other career politicians as they attempted to grill Mark Zuckerberg on his Libra stablecoin project. In their attempts to create viral sound bites, they only revealed their ignorance of how cryptocurrency and the blockchain function and how they could benefit the world’s unbanked population.
As the lawmakers struggled to form coherent questions about crypto, Zuckerberg patiently kept a calm demeanor and expressed little emotion while enduring the childish interrogation. It didn’t take them long to run out of questions, so they moved on to other topics like political ads and election rigging.
I’m not surprised to see the government look like a three-ring circus, and Congress is really just a side show compared to the Federal Reserve. After the severe lack of liquidity in the banking system was exposed, the New York Fed has announced that it will continue its Treasury repurchasing operations at least through January of next year, with a 60% increase in available overnight repo liquidity.
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Expect more shenanigans – the nation’s central bank hurriedly scrambles to inject cash into the illiquid banking system through next year at least. That, in tandem with the series of interest-rate “insurance cuts” to come (no one is denying it at this point), will provide a flimsy, artificial support system for the economy and markets that might possibly function in the short term.
But that’s all that matters for governments: the short term is everything, and all federal employees have their marching orders to maintain the illusion of prosperity. The Federal Reserve has no choice but to buy up Treasurys to expand its balance sheet – even while Fed Chairman Jerome Powell insists that this is not QE, though I’m choosing to believe his actions and not his words.
If Powell has any hawkish instinct left within him, it will be quickly extinguished by President Trump, who is now directly saying on Twitter that Powell will be derelict in his duties if he doesn’t cut interest rates further. Trump wants America to have negative interest rates like Germany, and he’ll continue to put massive pressure on Powell to slash rates to zero or below.
Even as the middle class struggles to make ends meet, the façade of abundance will persist and political expediency will prevail: monetary policy based on confusion and delusion will, soon enough, come to its conclusion.
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