Biden Gives the Fed a Sweeping New Mandate: Wokeism
As warning signs of an economic downturn build, Federal Reserve officials this week sought to downplay them.
New York Fed President John Williams told CNBC that he doesn't see a recession coming. "A recession is not my base case right now," he said. "I think the economy is strong.”
Scores of corporate CEOs and small business owners would beg to differ. The Small Business and Entrepreneurship Council released a survey finding that 88% of entrepreneurs are “concerned a recession is around the corner.”
Central bankers and politicians who like to paint a rosy picture of the economy are insulated from market signals.
In a highly competitive marketplace, there is no escaping the laws of supply and demand. Success is rewarded and failure is punished -- often brutally.
But in Washington, D.C., sometimes nothing succeeds more than failure. The more a government agency fails to meet its objectives, the likelier it may be to get rewarded with increased funding and new powers.
Having failed to achieve its dual mandate of full employment and price stability by pushing inflation to an unforeseen 40-year high, the Federal Reserve has shown its central planning skills to be deficient.
Yet the Biden administration is eager to give the Federal Reserve a broad new mandate to socially engineer “racial equity” in the economy.
Earlier this month, President Joe Biden cheered the House of Representatives for narrowly passing the so-called Financial Services Racial Equity, Inclusion, and Economic Justice Act.
The Act requires the Fed to “exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.”
The Act instructs the central bank to prioritize race in monetary policy decisions and regulatory actions. It instructs the Fed to institutionalize racial favoritism in hiring and lending throughout the banking system. And it tasks central planners with the sweeping objective of eliminating racial disparities in income.
Given that Asian-Americans represent the highest-earning racial group on average, their salaries, investment gains, and access to low interest financing would presumably have to be redistributed somehow to other groups in the name of racial justice.
Part of the race-levelling agenda may also involve reparations payments.
Earlier this year, Biden appointed radical activist Lisa Cook to the Board of Governors of the Federal Reserve System.
In a September 2020 “EconTalk” podcast, Cook called for a racial “reckoning” that might, among other things, include reparations for slavery.
Last year, the Federal Reserve Bank of Boston put out a paper calling for “restorative housing reparations.” Yes, when they say they want equity, what they really mean is the equity in people’s homes!
The ideological capture of the Fed and the expansion of its mission to include large-scale social engineering will make the central bank even less effective at executing its original dual mandate. When racial justice demands can only be met with more stimulus, then containing inflation will necessarily take a back seat.
If there’s any silver lining for the sound money movement, it’s that the overt politicization of the Fed will hasten the fall of public trust in it.
Other institutions that have embraced “Woke-ism” have experienced a similar fate. Public trust in the mainstream media has plunged to a record low after it formally abandoned objectivity in favor of activism.
Science and medicine, since becoming politicized, have rendered “the experts” a farce to half the country.
Meanwhile, educators, once universally respected, have caused millions of parents to fear that schools are indoctrinating their children with Marxist critical race theory and transgenderism.
For a variety of reasons, the Fed is losing credibility with the public. That’s a long-term threat to the value and world reserve status of the U.S. dollar.
Collapsing confidence in central bankers is also an opportunity for sound money advocates and precious metals investors. The more apparent it becomes that the Fed is wielding its tools for ends other than a stable currency, the more people will realize the need for a sound alternative.
The soundest currencies historically have been gold and silver. They remain irreplaceable today as the ultimate stores of real wealth, providing tangible security that no cabal of “experts” can replicate by fiat.