Powell: Fed supposed to operate in non-political way
Fed Chair Jerome Powell joins Princeton University economist Alan Blinder to discuss the state of the U.S. economy.
Video Transcript
JEROME POWELL: You know, I think we do have this precious grant of independence. And that really means that we need to stay-- stay in our lane, and just do those things that Congress assigns us to do. If we're going to roam all over the landscape, then we shouldn't be independent. We should be part of the elected branch of government. So that means we stick to our knitting, I would say.
We do have, though, we have-- we have tools that can be used in the financial system only in emergency situations, such as the global financial crisis of a decade ago, such as the pandemic. And those tools can only be used now with the approval of the secretary of the Treasury. This is under statute passed by Congress. This was under Dodd-Frank.
So we do use those tools. And they're very powerful. But they have quite a limited use. And again, only to be used in unusual and exigent circumstances with the permission of the Treasury secretary, who, of course, is part of the administration.
So I think we need to stress, and we try to stress all the time, that we have-- we have tools that we can use. But they're not for general times. Particularly now, what I would say is the tools that we're using now are lending tools, not spending tools.
So we don't have the ability to make grants of money to particular groups of people, no matter how directly they're affected by-- or companies affected by the pandemic. That is a job for elected officials who control spending and taxation. It's not a job for appointed officials like us.
So there is a need to underscore the limits of our powers, although our authorities are very strong. And at a time like this, you're seeing how strong they can be.