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The Last Fed Chairman?
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Last week the Senate confirmed Jerome Powell as Federal Reserve Chairman by a vote of 84-13. This is in contrast to the contentious debates and closer votes over Janet Yellen’s confirmation in 2014 and Ben Bernanke’s confirmation for a second term in 2010. Powell benefited from a perception that the economy’s recovery from the 2007-08 meltdown proves that the Fed is a capable manager of monetary policy. However, the perceptions of economic recovery and Federal Reserve competence are both far from the truth.

The economy may seem to have recovered, but the recovery is not built on a firm foundation. Instead it rests on Fed-created bubbles in areas such as automobile sales, credit cards debt, student loan debt, stocks, and even a new housing bubble.

The most dangerous bubble is the government debt bubble. The Fed facilitates deficit spending by monetizing the federal debt. The desire to enable Congress’ spending addiction is a major reason why the Fed cannot significantly raise interest rates, as increasing rates could increase federal debt payments to unsustainable levels. This may be one reason why President Trump has reversed course and endorsed low interest rates. Of course, all first-term presidents want low interest rates since they believe the low rates boost the economy and thus help them win reelection.

One of the issues Powell will face is increasing challenges to the dollar’s world reserve currency status. China is pressuring Saudi Arabia to price oil in Chinese yuan instead of in American dollars. China and other countries may take other steps, such as halting purchases of Treasury bonds, that could weaken the dollar. The threats to the dollar’s world reserve currency status will increase as concerns about US government and private sector debt, as well as resentment over US militarism and protectionism, grow.

The dollar still maintains its reserve currency status not because the dollar is strong, but because other countries’ currencies are weak. However, unless the US gets its economic house in order, that may not long be the case.

A new challenge to the dollar’s status is emerging from the private sector as more individuals seek alternatives to government-created fiat currency. The dramatic increase in the value of bitcoins may very well be another Fed-created bubble, but it is one fueled in part by desire to be free of the Fed’s ever-depreciating paper dollars.

Another sign of the people’s rejection of the Fed is the passage of state laws recognizing gold and silver as legal tender. Arizona passed such a law last year and Wyoming will soon consider a similar bill. As the failure of our current system becomes more apparent, more states will give their citizens freedom from the Fed’s money monopoly.

Much to new Fed Chairman Powell’s chagrin, support for the Audit the Fed bill remains high. As knowledge of how the Fed endangers prosperity grows, the pressure on Congress to pass Audit the Fed will prove irresistible.

Jerome Powell may seem to be assuming the Fed chairmanship at a time of increasing prosperity and renewed respect for the Fed. However, the prosperity is an illusion built on a series of Fed-created bubbles whose bursting will cause a major economic downturn. This will increase both the growing challenges to the dollar’s world reserve currency status and the number of people seeking alternatives to Federal Reserve-created fiat currency. Powell could be the last Fed chairman if the next Fed-created economic crisis leads the people to force Congress to audit and then end the Fed.

(Republished from The Ron Paul Institute by permission of author or representative)
• Category: Economics • Tags: Federal Reserve 
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  1. However, the perceptions of economic recovery and Federal Reserve competence are both far from the truth.

    Amen! How do I know this is true? You taught me the case against the FED Dr. Paul.

    Until I read The Creature From Jekyll Island I understood neither American history nor current national and international politics.

    I doesn’t matter who is FED Chairman. It’s much too late to undo the damage accrued since 1913. America will slide into the third world and stay there until there is honest money.

    • Replies: @Paul Jolliffe
  2. Powell could be the last Fed chairman if the next Fed-created economic crisis leads the people to force Congress to audit and then end the Fed.

    I am cautious about any predictions from Dr. Paul since his prediction, more or less, a few years ago, that gold was going up to $5,000 per ounce. Not exactly a prediction, but he did say, I believe, that was the true value of gold at the time, when it was not too far below $100, as I recall.

    Anyway, just as gold will surely hit $5,000 some day, so we shall see the end of the Fed some day. Meanwhile, the big question is what will replace the Fed as issuer of USD and, going even deeper into the monetary question, what commodity will replace gold as the monetary standard where such a standard counts — namely in the collective psyche of the world. The gold standard may inevitably reign as ‘king for a day’ some day, but the success of a global economy based on the gold standard is, like any other utopia, a delusional system. How about aluminum? Don’t laugh, you know-it-all conservatives! Discard your preconceptions and think about it!

    BTW: Of course, we already are seeing gold replacing dollars in certain transactions here in USA, and, no doubt elsewhere. And the FED’s rumored new “bit-dollar” may accelerate the trend toward that phenomena. But gold bugs continue to look silly in their populist propaganda, like when they claim that China’s RMB is already on the gold standard, since after all China has been buying gold.

  3. @Grandpa Charlie

    Don’t worry, the people who own the Fed already have a plan. USA could print it’s own money, like the constitution says, with no interest! Our politicians are either stupid or bribed and complicit. Kennedy tried to wean us off the Fed and back our dollars with silver. We all know what happened to him, but Lincoln and Andrew Jackson also attempted to wean us off “central banks “. Lincoln was assassinated and shots were fired at Jackson. Coincidence?

    • Replies: @Achmed E. Newman
  4. @Joekoool102

    I may be missing something that you’ve read about, Joe, but Lincoln was instrumental in issuing the Greenbacks, I believe the 1st US paper-fiat money since the Continental from before the US Constitution was written.

    Lincoln was probably shot for other various and sundry reasons. He was not the friend of sound money, and we wasn’t a friend of Constitutional Law either, BTW.

    It’s good to see people reading and responding to Dr. Paul besides just me.

    Hey Ron (Paul)!

  5. @Grandpa Charlie

    I agree first off with your general point that Dr. Paul is too optimistic. I would not take anyone’s but my own advice on speculative investments, and even my own has screwed me out of lots of money over the years! I just mean that Dr. Paul is too optimistic about what will happen, especially regarding the powerful men behind central banking and the Feral Gov’t in general. I believe that we will go though the financial crash that Ron Paul just warns us about*, and only when some of us get through it, will it be time to run our finances and other affairs conservatively.

    I don’t mean to imply that gold/silver are speculative investments, as they ARE real money – I just mean trying to time a big rise is just speculative investing. One oz of gold will always be one oz of gold, that’s how you think about real money.

    I agree absolutely about what you state about China. That government does just as much tomfoolery as ours, but they have the advantage we used to have – their country creates about 1/2 the wealth in the world. (That used to be the USA, 40 years back).


    * It’ll be very financially, socially, and maybe physically painful for most of us, and the only bright light is that the Stupidity level will drop drastically concurrently with the turmoil (unless the Commies win!)

  6. J. D. says:


    Russia’s Sberbank launches trading unit the size of a square in a small town
    February 1, 2018

    By Andrei Skvarsky.


    ”Russia’s biggest lender Sberbank has launched a huge financial sales and trading unit fitted with cutting-edge technology in its headquarters in Moscow.

    The Trading Floor, which, according to a Sberbank statement, is the largest bank trading unit in Europe, has a floor space of more than 4,000 square metres (about 44,000 square feet) that can seat more than 400 personnel.”

    Archive: Cyber-warfare: Five Major Russian Banks Repel Massive DDoS Attack:
    10 November 2016

    ”Sberbank confirmed the DDoS attack on its online services. “The attacks are conducted from botnets, consisting of tens of thousands computers, which are located in tens of countries,” Sberbank’s press service told RIA.”

    Archive: Economic Warfare: US-EU Sanctions directed against Russia. Energy, Finance, Defense
    September 12, 2014

    ” They include Sberbank, VTB, Gazprombank, Vnesheconombank (VEB) and Rosselkhozbank. They’re prohibited from raising capital in EU markets.”

    Note: A few years ago a rumor circulated on the Net which was on a new trade center to be launched in Ohio (?) to start a new currency for gradually replacing the composition of the USD with new crypto-currencies.

  7. Dr. Paul assumes that the Fed engages in criminal activity, and that another gratuitous audit, in addition to the regular Fed audits anyone can easily find online as free public documents, will get the goods on criminal Fed bankers.

    What if the sort of audit Paul wants discovers that the Fed bankers have generally complied with the law?

  8. jtgw says:
    @Grandpa Charlie

    In a sense, the dollar and any other currency in use already has a commodity standard, which is the expected purchasing power of the currency with respect to the array of all available goods. Indeed, it enjoys a kind of gold standard in terms of the market price of gold. The problem is that the purchasing power is so liable to change through creation of new currency. People’s expectations of the dollar’s value are largely confirmed from day to day, but the addition of new money subtly distorts this pricing mechanism in a way that privileges early recipients at the expense of later ones. So there is real harm in our current system even if most still don’t realize it and still trust the dollar.

  9. @WorkingClass

    I hope the “audit the fed” movement actually results in a real audit. However the forces arrayed against such a thing are formidable and ruthless.

    Under President Kennedy’s administration in 1963, the U.S. Treasury began issuing U.S. Notes in $2 and $5 denominations. It has been argued the statutory authorization for that was JFK’s Executive Order 11110.

    Perhaps it was.

    But anyway, the U.S. notes were printed and circulated and they were not issued by the Federal Reserve. I don’t know what JFK though about the Fed, but those notes were real, and had Kennedy’s policies been implemented fully, the Fed would have been weakened, and maybe finished.

    Professor Roberts, please devote some additional columns to this topic.

  10. J D. says:

    See video around 33:00

    The agenda is the engineered, complete financial collapse of the Euro and USD, leading to the collapse of worldwide currencies, for the creation of a ”world bank”, i.e., a world currency, and essentially the consolidation of power in the hands of a few people …

    (Canada holds the 2018 G7 Summit in June 2018, in Quebec).”

    ”…the reality is that gradual consolidation of power has led to some of the most brutal dictatorships in history, from Nazi Germany to the Khmer Rouge.”

    What does consolidation of power means? How do you consolidate power?

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