Cleaver Asks Chair Powell Point Blank: ‘Is It Dangerous To Blend Monetary Policy And Fiscal Policy?’

3 months ago

Earlier this month, Rep. Emanuel Cleaver (D-MO) questioned Federal Reserve Chair Jerome Powell on the independence of the central bank during a House Financial Services Committee hearing.

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Transcript

00:00The gentleman from Missouri, Mr. Cleaver,

00:02is now recognized for five minutes.

00:04Thank you, Mr. Chairman.

00:05Thank you, Mr. Chairman, for being here.

00:08And in some ways I want to follow up or at least respond

00:14to the very civil but I think reason

00:20of why we need an independent central bank.

00:25And your response was, you know, the question you raised would,

00:33if I answered it, it would be along some kind

00:37of a political avenue and you didn't want

00:40to drive on that avenue.

00:42So I'm also very much concerned about a lot of the discussion.

00:47I've been on this committee a while

00:50and so it comes up quite often.

00:53When the Federal Reserve was birthed around the turn

01:00of the century, I think, 1913, 1918, somewhere like that,

01:08prior to the establishment of the central bank, did we,

01:11was our country experiencing a lot of recessions

01:16because of, you know, no security,

01:21people felt no security, particularly the business

01:24community, and making big investments

01:28because nobody was in control.

01:30You just kind of think that what went on just went on.

01:34Is that relative?

01:35Yes. I think the lack of a central bank between 1836

01:40and the founding of the Fed was a period of lots and lots

01:43of depressions and a lot of it had to do with the crop cycle

01:47and the banks not being able

01:48to handle the very large seasonal swings

01:52and there was no central bank to provide liquidity.

01:54So that's, and that's really what gave rise to the founding

01:58of the Fed in the early part of the last century.

02:00Do you think that it would be, that it is dangerous

02:03to blend monetary policy and fiscal policy?

02:10To blend them?

02:11Yes.

02:12So we try to keep them very separate and, you know,

02:16we don't, we try not to, you know, express views

02:19on fiscal policy that's for elected people who have,

02:23you know, undergone elections and won

02:26and make those very difficult decisions.

02:27We have a really specific, narrow, but important mandate

02:31that we do that you've given us and we try to stick to that.

02:35And so we take your policies as given

02:40and then we conduct monetary policy with that.

02:44I don't want to draw you into any kind

02:50of a political response, but, and I have not read all

02:56of this Project 2025 document.

02:59I read some of it online a couple of nights ago,

03:03but even whether it comes out of a 2025 or a 3089,

03:08whatever, one of the things that I'm concerned

03:13about reading this, from this little, this document,

03:19that the document argues

03:22that the Federal Reserve is the inflation problem.

03:27And eliminating the Federal Reserve,

03:30imposing economic policy on the Fed that does not come

03:34from within the Fed.

03:36So I'm wondering here, would you agree with any of that?

03:47I just stated, whether it came from me

03:50or Chairman McHenry or anybody else?

03:54So I'll just say, first of all, you know,

03:57we're certainly a fair game for any criticism people have.

04:00I think we've, what we've learned and what we know is

04:03that having an independent central bank is really

04:06essential.

04:07If you want to have high and volatile inflation,

04:10then the quickest road to that would be

04:11to undermine the independence of the central bank,

04:14of the Fed in our case.

04:15So I frankly think that that view is very widely held,

04:19I find up here on Capitol Hill in both political parties.

04:22So.

04:23So eliminating the Federal Reserve is best

04:27for promoting economic stability.

04:29Yes.

04:32I knew that our chair, that the ranking member was going to come

04:39in and deal with the issue of housing.

04:40She always does, and we all appreciate the fact

04:44that she's obsessed with it, and I like that obsession.

04:48But I'm wondering, as we try to figure out how to deal

04:54with this issue, oh my goodness, my time's running out.

05:00Was that a question?

05:02I didn't finish it, but I sure, yes,

05:05if you knew where I was going, please.

05:09Gentleman's time has expired.

Cleaver Asks Chair Powell Point Blank: ‘Is It Dangerous To Blend Monetary Policy And Fiscal Policy?’

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