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The 'Woke' Fed
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President Joe Biden has ordered the Financial Stability Oversight Council to prepare a report on how the financial system can mitigate the risks related to climate change. The Financial Stability Oversight Council was created through the Dodd-Frank financial regulatory reform act and is supposed to identify and monitor excessive risk to the financial system. The council is composed of the heads of the major federal financial regulatory agencies, including the Federal Reserve.

Federal Reserve Chair Jerome Powell is no doubt pleased with Biden’s order. Powell has been pushing for the Fed to join other central banks in fighting climate change. Among the ways the Fed could try to mitigate the risks related to climate change is by using its regulatory authority to “encourage” banks to lend to “green” businesses and deny capital to “polluters.” The Fed could also use “quantitative easing” to give green industries an advantage over their non-green competitors. Another way the Fed could “fight climate change” is by committing to monetizing all federal debt created by legislation implementing the Green New Deal.

Climate change is not the only area where the Fed is embracing the agenda of the “woke.” Some Federal Reserve Banks have taken the lead in a series of events called “Racism and the Economy” that are concerned with dismantling “systemic racism.” The Fed’s commitment to ending systemic racism could lead the central bank to requiring that banks and other financial institutions further relax their lending standards for minorities. The role the Community Reinvestment Act played in the 2008 housing meltdown shows that when government forces financial institutions to give loans to otherwise unqualified applicants, the recipients of those loans often are unable to make their payments, lending to foreclosures and bankruptcies.

Racial justice arguments could also justify an easy money, low interest rate policy on the grounds that curtailing money creation slows economic growth, disproportionately harming minorities.

The Fed may court favor with the Biden administration and its congressional allies by going woke. However, it will face a backlash from those who oppose expanding government power to address nonexistent threats of climate change and to promote the lie that free markets are causing systemic racism. This backlash will be fueled by rising anger over widespread price increases. This will increase the already strong public support for the Audit the Fed legislation. A complete Federal Reserve audit will provide to Congress and the American people the truth about the Fed’s conduct of monetary policy, including how politics affects the Fed’s actions.

The use of the woke agenda as an excuse to further politicize the allocation of capital and continue to expand the Fed’s easy money, low interest rate policy will hasten and deepen the next economic crisis. This crisis will either be precipitated by or result in the rejection of the dollar’s world reserve currency status. It will also likely result in the collapse of the entire Keynesian welfare-warfare system. Unfortunately, there is a likelihood that the current system will be replaced with a government even more authoritarian than the current one. But, if those of us who know the truth can educate enough people about liberty, we can make sure the next economic crisis leads to a rebirth of limited government, free markets, and individual liberty.

(Republished from The Ron Paul Institute by permission of author or representative)
 
• Category: Economics • Tags: Federal Reserve, Joe Biden 
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  1. I really thought the ctrl-left had dropped the ball on the Global Climate Disruption™ stupidity after they got the PanicFest going in high gear. Nope, it seems they are still using that for fear mongering and for just another excuse to dole out cash.

    That was an excellent column, Dr. Paul. Just because I am “that guy”, I’ll make one small correction:

    You say “audit the FED”.
    No, not even “end the FED”.
    “End this beast of a Feral Government.”

  2. ruralguy says:

    Dodd Frank was passed to deal with the financial instabilities that were uncovered by the 2008 crash, so the Fed’s mission was augmented to include controlling risk besides its traditional duties of monetary control. The Fed is ruled by policy wonks, but all of the analysis is done by Economic Phds who really do see systematic risk in the Federal Government itself (as evidenced by the papers they are writing). Who knows, maybe they might see and start dealing with the real systematic risks.

    • Replies: @Jokem
  3. Jokem says:
    @ruralguy

    I am not holding my breath…

  4. “to address nonexistent threats of climate change ”
    Ignoring causes & “threats” there are 10’s of billions of $$’s going into investments into Russia’s north that are highly suggestive that “climate change” of some kind IS real.
    As for this stock Libertarian fantasy, we’ll be lucky if we survive the next economic crisis —
    “we can make sure the next economic crisis leads to a rebirth of limited government, free markets, and individual liberty.”

    • Replies: @Jokem
  5. Jokem says:
    @animalogic

    The data shows the climate IS changing. How much of this is due to human activities is explained by political reasons more than science.

    • Replies: @animalogic
  6. @Jokem

    “How much of this is due to human activities is explained by political reasons more than science.”
    Yep. I deliberately avoided causes b/c I just don’t know.

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