On July 15, 2024, Chair Powell participated in a discussion at the Economic Club of Washington, D.C.
At the Ron Paul Institute for Peace and Prosperity, former congressman and presidential candidate Dr. Ron Paul explains that the “desire to monetize the federal debt is one reason, if not the main reason, why the central bank keeps interest rates low.” He writes:
Politicians favor an “easy money” policy because it creates an (illusionary) economic boom. The Fed-created boom helps the politicians remain in office. A reason politicians favor low interest rates is they facilitate government spending and debt, thus enabling politicians to aid powerful special interests via government spending. The desire to monetize the federal debt is one reason, if not the main reason, why the central bank keeps interest rates low.
The policy of perpetually low interest rates favored by politicians will hasten the inevitable collapse of the fiat money system.
He concludes:
Since Congress created the Fed in 1913, the US dollar has lost over 97 percent of its purchasing power. This proves Donald Trump is right about the need for drastic changes in monetary policy. However, he is wrong to think that he, or any politician, bureaucrat, or businessperson, is capable of knowing the “correct” interest rate. Instead of giving politicians greater ability to influence the Federal Reserve, the next president should work with Congress to pass legislation legalizing competing currencies, forbidding the Fed from purchasing federal debt, and auditing and ending the Federal Reserve.
You can see what Paul is referring to in the charts below. The first is the total marketable and non-marketable public debt of the United States.
The second chart is a visual of the plight of the American dollar since the creation of the Federal Reserve. As Paul said, you can see that the dollar has lost around 97% of its value. That calculation uses the generous, government-massaged inflation numbers of the CPI.
Read more from Paul here.