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Senator Manchin Urges Fed to Immediately Taper to Halt Inflation and Avoid Tax Hikes

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16 comments on Senator Manchin Urges Fed to Immediately Taper to Halt Inflation and Avoid Tax Hikes

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Senator Manchin is Alarmed

Manchin’s Letter to Powell (Emphasis Mine)

With the recession over and our strong economic recovery well underway, I am increasingly alarmed that the Fed continues to inject record amounts of stimulus into our economy by continuing an emergency level of quantitative easing (QE) with asset purchases of $120 billion per month of Treasury securities and mortgage backed securities. The Fed has sustained $120 billion per month in asset purchases since June 2020, despite increasing vaccination rates to combat the virus and additional fiscal stimulus from Congress in the ARP. The record amount of stimulus in the economy has led to the most inflation momentum in 30 years, and our economy has not even fully reopened yet. I am deeply concerned that the continuing stimulus put forth by the Fed, and proposal for additional fiscal stimulus, will lead to our economy overheating and to unavoidable inflation taxes that hard working Americans cannot afford. 

Simply put, our monetary and fiscal stimulus response met the moment of crisis when our economy suffered the medical equivalent of a heart attack. But, now it’s time to ensure we don’t over prescribe the patient by further stimulating an already strong recovery and therefore risk our ability to respond to future crises we are sure to face. I urge you and the other members of the Federal Open Market Committee to immediately reassess our nation’s stance of monetary policy and begin to taper your emergency stimulus response. While I appreciate your commitment to maximum employment and stable prices, it is imperative we begin to understand that long term policy responses tailored for an economic depression, like the Great Depression and Great Recession of 2008, may not be what is required for today’s economy and could result in higher than desired inflation if not removed in time. 

Those are the middle two paragraphs of Manchin’s Letter to Powell.

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16 Comments
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FloydVanPeter
FloydVanPeter
4 years ago
Yes. Frightened, I am.
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oee
oee
4 years ago
That is the most idiotic writing since…the last post. There is only transitory inflation. What ever price increases are from the re-opening and the failure of the Trump tax cuts that supposedly was going to cause an investment boom that never came.
Re Joe Manchin and taxes
He obiously does not want tax increaesse because his part of the top 01% , which are the taxes that will be raised.
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numike
numike
4 years ago
The speed of the US economic recovery has been record-breaking. It won’t last https://www.cnn.com/2021/08/04/perspectives/us-economic-recovery-speed-slowing/index.html
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RonJ
RonJ
4 years ago
Politics is a game. We don’t know what is going on in secret. Is Manchin running cover for others, who can’t come out and say what he is? Who knows?
The simple fact is that we are going to wind up where we are going to, regardless of anyone’s posturing, on whatever. The shutdown over the debt ceiling in 2013, didn’t stop the debt from being where it is now. The FED put it’s portfolio on auto pilot draw down and it is now doubled. The globalist elitists want to remake the world.
What is that going to look like?
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RonJ
RonJ
4 years ago
Next stop, totalitarianism. Build Back Better is a Democrat Party slogan. It is also the slogan of the  globalist elitist WEF. Government debt is out of control, as is the stock market responding to it. As Martin Armstrong notes, socialism is failing.
The Medicare trust fund goes empty in a few years, if nothing is done.
Schwab’s WEF plan is for us to own nothing and be happy. Castro nationalized everything. Roosevelt confiscated privately owned gold. There is the precedent for government confiscating whatever else, in a declared national emergency.
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amigator
amigator
4 years ago
What is scary is he on the right path just about 12 years too late.
There is no turning back at this point without serve repercounsions to many. The sad part is it will only get worse and I think most would prefer COVID over the economic issues that applying appropriate fiscal responsibility will bring.
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Klemke99
Klemke99
4 years ago
Consumer price inflation has arrived.  I saw this week at the local grocery that Coke raised prices on the 1 liter bottle by 20%.  There are other signs to, but this jumped out at me.
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General Ripper
General Ripper
4 years ago
 Once extended unemployment runs out and if rent moratorium ends (now or later) we might be headed to a deflationary downward spiral since this has all been built on cheap money. 
On the other hand (as economist say), I ordered 10 chicken wings the other night…..$18.00! Used to be $12.00 a month ago.
WTF!  
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killben
killben
4 years ago
The bigger problem is there is no oversight of The Fed. They seem to be a law unto themselves.
They can buy anything they want. They can give any reason for that.
Oversight by the Congress is again of little use. After all they are in bed together.
As long as The Fed can do as it pleases things are unlikely to change.
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tbergerson
tbergerson
4 years ago
So Manchin is an economist now?  Sorry Manchin, you voted for both article of impeachment in the first impeachment, when no serious person could have even entertained the second article (impeaching someone for defending the office of the presidency against zealots in the congress), and he voted for the ludicrous insurrection article as well.  You are not a serious person.  Like one of the other commenters below said, if you want to do something about inflation, stop the mega absurd 2.5-3.5 Trillion dollar reconciliation package coming soon.  If you are not going to do that, then you are part of the very problem you are complaining about and have no ground to stand on.
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thimk
thimk
4 years ago
Oh how sweet, a plea to the feds . Wake up Joe;; reduce federal spending to sustainable levels.  DUH… partial sarcasm
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ThaomasH
ThaomasH
4 years ago
Manchin could be right that reducing purchases of certain assets could keep inflation expectations closer to 2% than not.  Of course the Fed should never announce what the values of any of its instrumental variables will be, so Manchin will never know it the Fed values his advice or not.

But the part I don’t get is what Fed policy has to do with (why it would be an input into) a decision to raise taxes or not.  What is his model?

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Eddie_T
Eddie_T
4 years ago
The frightening part is really pretty obvious, right?  If the Fed takes the punch bowl away the party is gonna end, and nobody will have to hunt to find a Red October…..it will find you, if you’re long stocks and RE.
I don’t really think a soft landing is possible. The current bubbles will only pop. They can’t be slowly and carefully deflated. 
It’s interesting, in that Manchin is making this public. He could have contacted Powell privately. So it is a political act….and Manchin has his reasons. 
Who does this remind you of?
Yeah, Ron Paul. Manchin is starting to remind me of Ron Paul. 
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Anon1970
Anon1970
4 years ago
Reply to  Eddie_T
It is the job of the Fed to take away the punch bowl just as the party is getting started according to former Fed chairman William McChesney Martin.
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Doug78
Doug78
4 years ago
Reply to  Eddie_T
For many people in and out of government the Fed is the sum of all fears because of all the Federal government institutions it is the one whose power is concentrated into the fewest hands and those hands have the power to make or break the world economy. It’s a scary thought.
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shamrock
shamrock
4 years ago
Senator Manchin has a bachelors degree in Business from 1970 and has worked for some coal companies, so naturally he is an expert on central bank monetary policy.  If he wants to do HIS job and his part to stop inflation then he will put a stop to the $3.5T socialism bill.
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