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Fed Chair Powell Asserts Money Supply is for Central Banks not Private Sector

Lucas Cacioli   Jun 18, 2020 18:06 3 分钟阅读

Federal Reserve Chairman Jerome Powell asserted that the private sector has no place in money issuance, and by extension the development of a Central Bank Digital Currency (CBDC).

The House Committee on Financial Services met again yesterday, and an interesting exchange took place between Fed Chairman Jerome Powell and Representative Tom Emmer (R-MN) over whether CBDC should be developed in a private-public partnership.

In the hearing on June 17, as the topic turned to CBDC, Chairman Powell made his feelings clear that he did not view the private sector as having any place in money issuance.

Where is the Digital Dollar?

In a previous open hearing by the House Committee On Financial services the Honorable Christopher Giancarlo once again advocated for the use of a Central Bank Digital Currency (CBDC) as an effective means of stimulus distribution and added that China is gaining a lot of ground in this regard.

But how far off is a United States CBDC or digital dollar? That was the question posed by Representative Emmer, a ranking member of the Fintech Task Force, to the Fed Chairman as he questioned, “What substantive recent actions has the Fed taken to understand and experiment with this technology?” 

While Powell responded to the inquiry, his answer was very vague and diplomatic. He simply said that the US Government has an obligation to the public to keep them up to speed with innovation. He added, “If this (CBDC) is something that is going to be good for the United States economy and for the world’s reserve currency, which is the dollar, then we need to be there and we need to understand it first and best.”

No Place for the Private Sector in Money Supply

Later in the hearing, Powell also responded to the initiatives of the Digital Dollar Project, which is headed up by former CFTC Chairman Giancarlo—who has expressed a need for the digital dollar or a CBDC to be developed through a private-public partnership.

Powell clearly expressed that neither he nor the Federal Reserve were interested in such a collaboration. He said, “The private sector is not involved in creating the money supply. That’s something that the central bank does.” He added, “I don’t really think the public would welcome the idea that private employees who are not accountable solely to the public good would be responsible for something this important.”

It is unclear what accountability Powell refers to, as the US government continues to print money from thin air with seemingly little thought for the consequences on the dollar’s value and the incoming inflation that will be felt globally.

Protecting the Dollar

The response of Chairman Powell regarding the private sector being involved in money issuance should come as no surprise as the US Government has, throughout their history, gone to extreme measures to retain control of the defacto global currency in the US Dollar.

The inception of cryptocurrencies like Bitcoin, which, was essentially built to potentially destabilize and displace the central source of power for our governments—their control over traditional financial systems and monetary issuance—has been a growing concern to the United States.

US authorities and regulators have famously hammered Facebook’s Libra project into submission as a token supported by two billion users was again too much of a threat to their monetary control. US regulators also clearly encroached on the rights of other sovereign nations when they banned the distribution of Grams and the launch of the TON, not just in the US but globally. 

President Trump has been incredibly outspoken on the subject of Bitcoin and also believed Facebook’s Libra to have little standing or dependability. Last year he was quoted saying, “We have only one real currency in the USA. It is by far the most dominant currency anywhere in the world, and it will always stay that way. It is called the United States Dollar!”

 


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