Some states are reopening, and some are extending lockdowns. Either way, the future of the world’s biggest consumer economy looks shaky at least. With this point universally understood, the chairman of the Federal Reserve, Jerome Powell, has stepped in to say that the Fed is prepared to print as much new money as needed in order to stabilize the economy as it currently stands on unstable grounds.
According to The Washington Times, “Federal Reserve Chairman Jerome H. Powell said Wednesday that Congress might need to spend more on coronavirus relief to pull the nation out of an economic crisis that has cost more than 20 million jobs.” For those unclear as to how bad that number really is, it equates to an estimated 1 in 4 working-age Americans being pushed out of a job temporarily or permanently thanks to the current COVID-19 pandemic.
“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Mr. Powell said to a panel streamed online hosted by the Peterson Institute for International Economics.
Because of the weight of Powell’s words, domestic markets “sank in a sign of pessimism” due to the grave warning. The Times notes that the “Dow Jones Industrial Average fell 2.2% to 23,248, while the S&P 500 fell 50 points or 1.7% to 2,820.” It’s important to note that Powell’s comments came in light of the recent relief bill offered by House Democrats, who are currently proposing a “$3 trillion measure to provide more aid to states and cities, as well as for laid-off workers.” While the House and the Senate would of course bat back and forth over final details if the bill gets any footing, what has been approved by both Congress and the White House is a “$2.8 trillion in aid for businesses, workers and states to weather the crisis.”
“Additional fiscal support could be costly,” Powell continued, “but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” he said. “This tradeoff is one for our elected representatives, who wield powers of taxation and spending.”
Either way, regardless of whatever form of economic stimulus and relief comes out of both legislative chambers and the White House, Powell is ready to crank on the money printer at a moment’s notice; how much he will print, however, is entirely up to House Democrats and Senate Republicans.