EDITOR NOTE: Imagine a steady stream of debt becoming a part of your “balanced” budget? That’s what the Chicago Fed president Charles Evans is proposing. More lockdowns (its economic ramifications included) and more money printing. There is a benefit to locking down the spread of the virus, of course. It just happens to coincide with the Fed’s favorite tool--that is, intervention. Evans’ comments also reveal the Fed’s misguided assumption that it can control the course of the economy by manipulating the money supply. Gold’s response shows a vote of no confidence.
Chicago Fed president Charles Evans says a 4-week lockdown could help.
Evans also says More Fiscal Support ‘Incredibly Important’
It’s “incredibly important” the U.S. deliver another round of fiscal policy measures to aid the economy as it weathers the coronavirus pandemic, said Federal Reserve Bank of Chicago President Charles Evans.
“Fiscal policy has been unbelievably important in supporting the economy during the downturn that we’ve been experiencing,” Evans said in an interview Sunday on CBS’s “Face the Nation.”
“That continues to be important because we’ve not got control over the virus spread. I think that public confidence is really important, and another support package is really incredibly important,” he said.
“As you look at the economic outlook there are some negative scenarios and the ones that are most pessimistic involve not supporting state and local governments,” he said. “States have to balance their budgets. They are experiencing reduced tax revenues and so there will be employment reductions.”
States don't have to balance budgets and Illinois is proof.
Rules allow long-term borrowing to be part of "balancing" the budget.
That aside, the point is taken.
Evans repeated that point on Sunday and said that a hard lockdown of four to six weeks suggested by his Minneapolis Fed colleague Neel Kashkari might help get the pandemic under control. But he doubted the U.S. government would do it.
“It would come at quite a lot of hardship for small businesses. It would require tremendous fiscal support. If the national U.S. government were willing to do that I think we could knock down the virus spread,” Evans said. “While that could work, I’m not optimistic that that would actually be adopted.”
Third Call For More Free Money
On August 3 I noted Second Fed President Calls For More Free Money.
Richmond Fed President Thomas Barkin issued a video call today for more free money.
Thomas Barkin joins Minneapolis Fed President Neel Kashkari in the free money call.
Kashkari on a Lockdown
“If we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it,” Kashkari said.
- Hard Lockdowns: Two Fed Presidents, Neel Kashkari (Minneapolis) and Charles Evans (Chicago) support hard lockdowns.
- More Free Money: Three Fed Presidents, Neel Kashkari (Minneapolis), Charles Evans (Chicago), and Thomas Barkin (Richmond) support more free money.
It is a certainly that all or nearly all the Fed presidents are in the Free Money group.
Kashkari, Evans, and Barkin have made it official.
Gold's Response to Free Money
Gold has responded to these views, and rightfully so.
For discussion, please consider Gold Soars to New High Above $2000 While Managed Money Sat it Out
What about the US Dollar? I am, glad you asked.
Originally posted on The Street