By Graham Summers, MBA | Chief Market Strategist
In case you missed it, an undercover journalist sat down with Aurel Hizmo a principal economist from the Federal Reserve who personally writes speeches for Fed Chair Jerome Powell.
During the course of the conversation, Hizmo commented that Jerome Powell’s legacy was that he was “somebody who held the line against Trump” that “Trump is a crazy person” and that conservatives are “dumb.”
Now obviously, these are offhand comments made by someone about Powell, not by Powell himself. But considering that this individual writes speeches for Powell you can safely assume that he spends a decent amount of time with the Fed Chair and has a decent idea of Powell’s views on things.
This video, taken along with Jerome Powell’s bizarre foray into social justice issues (climate change, reparations), as well as the Chair’s clearly political views on monetary policy (cutting rates by 0.5% before the 2024 election, but refusing to cut rates once Trump won), builds a pretty compelling case that Jerome Powell is unfit to be Fed Chair.
For those who don’t keep track of these things, below is a list of the more egregious issues that have occurred under Powell’s tenure:
- The Fed claimed inflation was transitory, unleashing untold suffering on Americans, until the week that former President Biden nominated Powell for a second term… at which point Powell dropped all references to “transitory” inflation and began urging the Fed to raise rates. This suggests Powell was more concerned for his career than Americans’ financial well-being.
- A massive insider trading scandal during which numerous major Fed officials were caught trading on insider information concerning Fed policy. This scandal resulted in several Fed officials resigning and massively damaged the Fed’s reputation. Powell was in charge of the Fed throughout this period.
- Powell’s decision to promote climate change, reparations, and other woke political issues that are outsight the Fed’s Dual Mandate as set forth by Congress. There was no reason to do this other than personal preference which suggests Powell is more of a political activist than central banker.
- Powell openly criticizing the Trump administration’s trade war/ tariffs after ignoring egregious fiscal policies the Biden administration ran for four years (adding $10 TRILLION to the debt, running emergency levels of deficit spending, relying extensively on issuing short-term debt thereby setting a debt bomb for the next administration).
- Powell choosing to torch the Trump administration in a major speech at a time when the financial system was under extreme duress after stocks erased $11 trillion in wealth (remember, the Fed’s primary responsibility is to provide financial stability, NOT issue controversial statements when stocks are collapsing).
In this context, I believe there is ample evidence here that Powell is unfit to serve as Fed Chair. It is one thing for the head of a community bank to do this… it’s something else entirely for the single most powerful central banker in the world to be doing it.
If you think I’m being overly dramatic here, consider that by refusing to cut rates today, the Fed is going to cost the U.S. HUNDREDS of BILLIONS of dollars.
The U.S. needs to roll over $9 trillion in debt in the next 12 months. By refusing to cut rates, the Fed will force the U.S. to refinance this debt at a higher interest rate. This will cost the U.S. hundreds of billions of dollars in debt payments over the coming years. The Fed could literally cut rates now, give the U.S. a chance to lock in lower debt payments, and then raise rates down the road if inflation reappears (as of now, there are NO signs that this is the case, but you never know).
A crisis is coming… and the Fed is 100% responsible. The fact that stocks are oblivious to this is nothing new: stocks were ignorant of the coming crash in 1999 and 2007 too.
With this in mind, investors should ride the current bull market in stocks while keeping one eye on the exits. We are urging our clients to do precisely this with a tool we’ve developed that has accurately predicted every major market collapse in the last 40 years.
We detail it, how it works and what it’s saying about the markets today in How to Predict a Crash. Normally we’d sell this report for $499, but in light of what’s happening with the Fed today, we’re making just 99 copies available to the investing public.
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Graham Summers, MBA
Chief Market Strategist
Phoenix Capital Research
