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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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.

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