West Virginia Democratic Senator Joe Manchin has requested the Federal Reserve to begin to slow down its monetary stimulus, or what we like to call it, its “money printing system.”
Despite growing inflation, the Federal Open Market Committee — which controls the US Federal Reserve’s monetary policy — has so far refrained from altering its near-zero interest rate goal or reducing its monthly asset purchases of $120 billion.
On Thursday, U.S. Senator Joe Manchin (D-WV) sent a letter to Fed Chair Jerome Powell stating that the stimulus was no longer necessary given the U.S. economy’s recent recovery.
Below is an excerpt from that letter:
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 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.
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.
Waller – a member of the Federal Open Market Committee — stated in an interview with CNBC that monetary and fiscal stimulus had accomplished their goals.
“In my opinion, that’s substantial progress and I think you could be ready to do an announcement in September,” he explained, adding that if the next two jobs reports “come in as strong as the last one, then I think you’ve made the progress you need.” If they do not, “then you’re probably going to have to push things back a couple months.”
“In my view, with tapering we should go early and go fast in order to make sure we’re in position to raise rates in 2022 if we have to,” he asserted. “I’m not saying we would, but if we wanted to, we need to have some policy space by the end of the year.”
