Jerome Powell To NBC: ‘We’re Not Going To Run Out Of Ammunition. That Doesn’t Happen.’

Jerome Powell made an exceedingly rare cameo on national television Thursday morning, in an effort to help regular Americans understand what, exactly, the Fed’s role is in helping the country survive a public health crisis and endure what’s widely expected to be the deepest downturn since the Great Depression (even as it will likely prove fleeting).

Powell’s appearance on NBC’s Today went ok, all things considered, but as market participants know all too well, master public relations manager Jay is not.

“Do you think we are already in recession?”, Savannah Guthrie asked.


“We may well be in a recession”, Powell conceded, stating what, to all economists, is obvious. “Again, I would point to the difference between this and a normal recession. There’s nothing fundamentally wrong with our economy”, Powell added.

Importantly, Powell also emphasized that there is no limit on the amount of support the Fed will provide in terms of lending to the sectors that need it.

“You do have the ability to conjure money out of thin air”, Guthrie said, quoting something she read in the media.

A visibly incredulous Powell (incredulous because outside of economic circles, virtually nobody does a good job describing the process by which the Fed “conjures” money) did his best.

“In situations like the present we do have the ability to use our emergency lending authorities and the only limit on that is how much backstop we get from the Treasury department”, he said, alluding to the various guarantees from the ESF on some of the facilities the Fed has already announced, and, more to the point, the massive fund included in the $2 trillion virus stimulus bill.


“We’re required to get full security for our loans so we don’t lose money, so the Treasury puts up money as we estimate what the losses might be”, Powell went on to explain, clearly recognizing he’d likely already lost the audience. “Essentially, the answer to your question is ‘no'”.

Commenting on the Fed’s capacity to step in and provide credit where capital markets have simply stopped working, Powell said “we will keep doing that aggressively and forthrightly, as we have been”.

“When it comes to this lending we’re not going to run out of ammunition. That doesn’t happen”, he added.

No, it doesn’t. Which is something the vast (vast) majority of Americans and even some very intelligent market participants do not understand.

Asked if “the economy [can] handle a monthslong shutdown if that is what the public health emergency requires and demands”, Powell tried to walk the fine line between hewing to the concerns of the medical community and pacifying a president who wants the economy back online “by Easter”, to quote Trump.


“At a certain point we will get the spread of the virus under control and at that time confidence will return”, he mused. “You may well see significant rises in unemployment and significant declines in economic activity, but there can also be a good rebound on the other side of that, and that’s one of the things we’re trying to do by ensuring the flow of credit to the economy”.

As you consider Powell’s remarks (admittedly delivered in a tone and cadence that leaves something to be desired in terms of academic elegance) I would implore you to tune out those who insist the Fed should not provide an essentially unlimited backstop to the economy.

Smart people can (and will) continue to debate the methods and whether they facilitate inequality and encourage risk-taking, but the notion that hyperinflation is coming or that the emergency monetary policy response represents an existential threat beyond that which builds up in society as asset bubbles are inflated and the wealth gap grows via the second-order effects of quantitative easing, is patent nonsense.

As Yuval Harari puts it, “there are no gods in the universe, no nations, no money, no human rights, no laws, and no justice outside the common imagination of human beings”.

“Money” isn’t an actual, real thing that exists outside of our own imagination. It can only destroy us if we allow it to. Congress’s willingness to pass a $2 trillion spending bill without worrying about how we’re going to “pay for it”, is evidence that, when push comes to shove, people do acknowledge that reality – even as they’ll go right back to parroting the dangerous myths of Austrian economics once the current crisis has passed.


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9 thoughts on “Jerome Powell To NBC: ‘We’re Not Going To Run Out Of Ammunition. That Doesn’t Happen.’

  1. I agree- but hopefully when the dust settles from all of this (from resulting supply/ demand economic changes, both domestic and global, and from any resulting political changes here and abroad) US “money” will still be perceived to be the world’s primary reserve currency.

    1. What would replace it? The de-dollarization of reserves is proceeding, but a pace that might very well be described as “absolutely glacial”.

      The biggest threat to America’s reserve currency status has nothing to do with monetary policy or fiscal policy or debt, it has to do with foreign policy and the weaponization of the US financial system against friends and foes alike. When people begin to think the USD will be used against them, the will de-dollarize. But that has nothing to do with money printing or debt. It has to do with misguided foreign policy and an administration that can’t be trusted.

      1. If we do as good a job predicting de-dolarization and geopolitics as we did the onset of this latest global crisis and the inevitable consequences yet to come , then indeed all bets , as to how this world looks in 20 years are off the table…. Same goes for the glacier…

  2. There’s nothing fundamentally wrong with our economy”, Powell added.

    However, fundamentally, our economy is based on casino mentality and excess greed, thus the premise that The Fed and or Trump or politicians are required to goose the game and ensure that any idiot making bets will be a big winner, is asinine! One reason the housing bubble came into being, was because lending standards were reduced, and ninja loans excited everyone, including The Fed. It was The Fed who fueled a bubble of excess, and as usual, here we go again, making sure that any wanna be daytrader or hedge fund can run wild, without any accountability. The moron Ed Yardeni suggested on March 4, in his blog, that the market was falling because of Bernie & the threat of socialism. So how is it, that people who were panicing over socialism, openly accept a capitalistic economy based on markets without risk? On one hand, we’ll prop up and support any shitty bank or daytrader, but then fail to provide social healthcare to people who live in our casino economy. It is possible that this new thinking will conveniently open the door to allow everyone to bet with their healthcare insurance plans and their social security accounts, in fact, why have social security, when The Fed now has a program to make every poor moron wealthy?

  3. America deserves a more open/balanced discussion of the potential changes to our country – including the long term fundamental changes to our society, economy, global position and form of government – that could result from unlimited money printing.

  4. Rant continues: Moral Hazard, what can we fear from excess and a society that doesn’t understand fear or risk, or accountability. Perhaps this is a new order, the Age After Aquarius, where bonds and debt, in terms of lending money will fade away, as we all embrace unlimited riskless wealth, where there is no downside, only more and more. As poverty is erased and debt forgiven, is it possible that society will witness a new area of intelligence, linking to a time when there is no longer homelessness, addiction, terrorism and all the I’ll that were such a huge part of the growing chaos, which suddenly peaked with this virus. Indeed, the virus is a blessing, transforming our society from decay, into this new time when we’ll all share in the glory of Trump’s connection to God. What glory lies before us and what heights will be reach, there are no limits to our imagination — or moral Hazard. Amen

  5. At the end of this debacle I would surmise there will be some major changes to our country. But it is not so straightforward to predict what those might be. You could make an argument that the country will have seen the light, and make major changes to rebuild the safety net for ordinary citizens and to make the rungs of the ladder lower to that it is possible for more of society to be able to climb the the ladder of well being and success. But it could easily go the other way to an even more extreme version of winner take all and resemble “Beyond Thunderdome”…..I would not bet one way or the other.

  6. I remember encountering Austrian economic thinking in graduate school and thinking what an utterly riduclous academic construct it was. Also as a reminder, Ayn Rand applied for and collected social security in her lifetime. Nobody with a heart or brain would advocate letting society burn to the ground to avoid “moral hazard”….

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