What's going on guys, It's Ricky here with Techbook Solutions and Jerome Powell is going to be testifying in front of Congress today and we will be hosting that live stream and it should start in just a little bit. So here we go. All righty, so should be starting in the next couple of minutes. What's up, What's up? Good morning, Good morning.

How are you guys all doing Today we got NASDAQ Market pretty much consolidating right now. No true. Direction One of the things that we always talk about is again, anytime that you are unsure of Market Direction Just make sure you don't put yourself in a position where you can't tolerate worst case scenario, right? We do not know. No one can predict what is about to happen or what he's going to say or not say.

I Just know that the market as of right now is uncertain. Um, and here he goes. All right. Well, Market's selling off and he hasn't even started speaking yet.

There it goes. So any moment now you should be speaking All right. Nice little pop off. Look at that.

NASDAQ Market dropping I Guess Market is just factoring in maybe a more aggressive interest rate hike. Yep, got NASDAQ with a really nice push down if I cracked 1K I will join Lpp. Okay, sounds like a plan. all right.

Big big push here. Look at that. There it goes. Real damage.

Look at that. Oh my goodness. So again, this is just the market reacting or getting prepared. He hasn't even started speaking yet, but again, we talked about it right.

Do Not put yourself in a position in which you cannot tolerate I Do Not think that the market you know you might be asking what is causing the market to sell off right now. Um I Think the uncertainty is the market will sell off if Jerome Powell comments on being more aggressive with future interest rate hikes. So what we mean by that is, well, if he reports that he's going to be more aggressive and raising rates in the next interest rate hike, which should be March 22nd of 2023, the market will most likely react in a negative way, right? Raising interest rates is never good for the overall economy. It means that it's more expensive to borrow money.

Now, if he says that he supports a lower interest rate hike, then that's a little bit different, right? That supports that. Oh, we don't need to be as aggressive. So therefore, and look at that. super super quick.

We add Sqq up two percent on the day, but no I mean to my understanding, he has not started speaking yet. Okay, Jerome Powell is late surprise surprise. If you've watched any of his speeches before, we're not too surprised, right? Um, but this is beautiful for if you're part of my Lpp team, this is going hand in hand with what I had an opinion on. but again, it's just an opinion I've made a video yesterday I Talked about why I think that the market is going to sell off based off of recent economic data and based off of the unemployment report, the initial claims report there's an unemployment report and non-farm payrolls that is about to be released this.

Friday Initial claims and continuing claims have all been coming in lower than expected. I Think that supports a stronger labor market then I think that will only support a larger interest rate hike because our economy can take it. Here it goes: I Hear you will come to order Welcome Sarah Powell Thank you for doing your duty, Door committee doing your duty so again I Hope that earn your thumbs up. Please make sure you subscribe are actually working including how those actions affect American Jobs and their paychecks.

prices are still too high across many parts of the economy. We know that who feels it the most when the cost of rent and groceries go up. It's not the economic pundits and politicians who lecture us about discipline instability. It's not the corporate Executives who pretend they're making tough choices about prices while reporting record profit increases quarter after quarter and doing more and more stock.

BuyBacks So people working hourly jobs to make ends meet. It's seniors on fixed income and Social Security it's everyone who gets their income from a paycheck each month, not an Investment Portfolio So save Americans who stand to lose the most at the Fed's actions to curb inflation go too far, no matter what goes wrong in our economy. A global pandemic, a war in Eastern Europe Weather disasters. profits somehow always manage to go up.

Workers are left paying the price. As you've noted, chair Pile of the Fed's tools are only one element in our fight against inflation. It's a complex problem. Interest rates are a single, we know blunt tool.

Raising interest rates can't rebuild our supply chains and fix demand imbalances from the pandemic. Raising interest rates won't end Russia's brutal invasion of Ukraine Raising interest rates won't prevent avian flu from devastating one-third of our egg supply, or weather disasters from destroying acute crops and raising interest rates Certainly won't stop big corporations from exploiting all of these crises to jack up prices far beyond the increase in their costs last year. Corporate profits at a record high corporate PR Chiefs Assure us that these companies just have to raise prices. Their costs are going up, The workers just want to be paid too much.

They have no other choice. they tell us yet. When you look at their profits, their executive salaries, and their stock buyback plans sure doesn't look like corporations have exhausted every available alternative. So Brazen even Global Bankers call in the FED to identify.

This profiteering is one of the biggest drivers of inflation. Paul Donovan Chief Economist of Global Wealth Management at UBS wrote the FED should make clear that raising profit margins are spurring inflation. Companies have passed higher costs onto consumers, but they've also taken advantage of circumstances to expand profit margins. The broadening of inflation Beyond Commodity prices is more profit margin expansion than wage cost pressures.

Think about that from a chief. Economist at UBS I'll say it again, they've taken advantage. These companies have taken advantage of circumstances to Pro to expand progress margins. Broadening of Inflation Beyond Commodity prices is more profit margin expansion than wage cost pressures.

Unquote the FED Understandably, the FED can't force corporations to change their ways or rewrite the Wall Street business model on its own, but the FED can talk about it. High Interest rates, falling wages, increasing unemployment are all Hallmarks of failed policies that end up helping. Wall Street The largest corporations in the country, the wealthiest people in the country. Because let's be clear what we're talking about when people use the economic speed that can.

Cloud This conversation: cooling the economy means laying off workers, Lowering demand means workers get fewer raises. Of course, there are times when the FED must act. We can't allow inflation to become entrenched. We've seen encouraging trends that is that that isn't happening and there are other ways we can bring prices down instead of lowering demand again, making people poor, laying people off, denying worker raises.

We can speed up and strengthen our supply chains. We can bring critical manufacturing back to the U.S We can rebuild our infrastructure. It's what we're doing with the Chips Inflation Reduction Act with the Bipartisan Infrastructure bill. For the first time in decades, we're finally recognizing the damage that I and many of my colleagues warn corporate of the corporate offshoring would do to our economy.

look at: East Palestine Ohio A community that Senator Vance and I have visited a number of times recently. America Learned about this small town last month. What a Norfolk Southern Train Derailed and spewed hazardous material into this community East Palestine is more than just a disaster. Headline: Columbiana County was once the center of American Ceramics manufacturing at one time producing 80 percent of Ceramics of dishware in this country.

One County produced 80 percent of it when I was there last week. I was talking to the sheriff at the 1820. Candle Company He was talking about how the last one closed just a few years back. Like so many Industries these jobs moved overseas and we know why.

The same reason Norfolk Southern cuts cost at the expense of safety eliminating one-third one-third of its Workforce In the last 10 years. Then you're surprised with these derailments. It's the same reason corporations now keep prices. High Even as supply chain stabilize, it's the Wall Street Business Model chair.

Paul Knows that I Know that my Republican colleagues and Democratic colleagues know that it's a Wall Street business model quarter after quarter, Corporations are expected to cut costs at any cost, They skimp on safety. They move production overseas the countries where they can pay workers less because of trade deals that they lobbied for in Wall Street demands they post profit increases even in the middle of a global pandemic. That's the problem with our economies. And not only will higher interest rates not solve it, if they're overdone, they'll make it worse.

We can't risk undermining one of the successes of our current economy. For the first time in decades. Workers are finally, finally starting to get a little power in this economy. Unemployment's in the historic low 3.4 That's not just a number.

That means Americans have more opportunities, more options even in places that haven't seen a lot in a man raises and retirement security and paid sick days and some control over their schedules, it means more. Americans have the dignity, have the dignity that comes with a good job that provides for your family. We must hear ensure that all Americans have the opportunity for that Dignity of work. It's a critical time.

The consequences and missteps could be severe. Mr Chairman: Two more things that affect affect your job. It's not just monetary policy that threatens American pocketbooks. Some of my colleagues have threatened the nation's full faith and credit by holding the debt ceiling hostage for partisan politics.

Instead of paying our bills on time, they're threatening, essentially threatening all Americans the Fifth Circuits. Consumer Financial Protection Bureau Ruling could also cause unimaginable instability and Chaos for families for consumers, but also as the chair knows, for a financial system, the fifth Circuit is wall. Street's no doubt about it if this circuit is Wall Street's favorite. Courthouse It recently ruled the Cfpb's independent funding funding is unconstitutional.

If the Supreme Court upholds the Fifth Circuit's ruling, it will not only devastate Cfpb, it will threaten lower lows forming on NASDAQ Federal agencies including the Federal court today hearing today's here Balance is still a mandate and continue to promote an economy where everyone who wants a good job could find one. An economy that works for everyone sorry, sorry about sitting here looking at my repair, my prepared remarks thinking about hey, there's an opening coming or Vice Chairman Brainer is moving on I Think it's really important for us to make sure that all the information that we need in order to make a good decision on the next time that we have in a timely fashion. So I would really implore the chair to make sure that happens that every question, every question there that is uh asked from the person we get, Every member of this committee has their questions answered in a timely fashion and that the staff has their answers in time of fashion. listening to Chairman Brown I Thought to myself Fascinating, truly fascinating I concluded that well I know chairman Brown pretty well.

I Am sure he is sincere in his rant, but let me just say this spending and printing trillions of dollars caving to the radical left in this country market trying to recover policies positive and then implemented that led to the worst inflation in 40 years. Seeing our inflation at 9.1 percent, seeing American families struggle because of the weight of the government on their shoulders, seeing the devastation from South Carolina to Ohio is unbelievable. That's progressives in this country who caused a 9.1 percent inflation within turn somewhere besides in the mirror, to see the absolute devastation caused by their out of control spending is remarkable. Remarkable To stop the out of control inflation caused by the out of control spending, the FED steps in to cool the economic well.

The definition of coolant economy is necessary because we've seen the most radical approach to a problem that was in our rearview mirror being used as a trojan horse to bring in a level of socialism and spending that our nation has not seen in my lifetime. The facts are very simple when you get to 9.1 inflation in this nation: As a kid who grew up in a single parent household mired in poverty a 40 today a hundred percent just a year ago, increase in the gas prices devastates single mothers around this country for seniors on fixed income whose savings are being depleted. Average cost just last month of a 433 dollar increase because of inflation For my friends on the other side of the aisle to look any place besides a mirror I find stunning. The truth is that when your food prices go up over 20 percent, when your electricity is up over 20 percent, you have to ask yourself where in the world are they cannot be in this universe? It must be an alternate universe where in fact, it's okay for us to see prices go through the roof and our economy not stumble but fall into a ditch.

Why are we in the ditch? Because progressives used the pandemic as a way to usher in a form a spending that takes the money out of the pockets of everyday Americans and puts it in the coffers of the government. There is a better way. The better way is to trust the American people. And when you do so, we don't have to have the FED come in and raise interest rates so high to quell the challenges in our economy so that today versus 18 months ago, the price of the same house for your mortgage payment is twice as high.

Why? because of the runaway spending of our friends on the other side of the app testing same support I'm sure I do not have time for my opening comments but I will say without any questions as I look around the country and I ask myself how devastating is it that today it cost 433 more dollars than it did a year ago? The answer is it is a crisis when the average family in our country just a couple years ago didn't have four hundred dollars in their savings for an emergency to have prices go up by this amount. Devastating to have a conversation about rents around the country looking at the inflationary effect and the absolute Devastation of a snarling supply chain we haven't seen in my lifetime. Drop a thumbs up if you just want Jerome how to speak already? Unbelievable. But to get to you Chairman Powell One of the comments that you've made that thing is really important and one of the speeches you gave in January and I apologize for my rant.

It's one of the base of my rep. It's consistent with my friend here, um, it is essential. You said that we stick to our statutory goals and authorities and that we resist the temptation to broaden our scope to address other important social issues of the day. Taking on new goals however, worthy without a clear statutory mandate would undermine the case of our independence.

You further noted that and I quote without explicit Congressional legislation. It would be inappropriate for us to use our monetary policy or supervisory tools to promote a Greener economy or to achieve other climate-based goals. We are not and will not be a climate policy maker. Do you still stand by those comments I Do thank you.

Finally, we're not a new question I Know I Get it finally? Yes. I I Knew the Chairman would knock that from my time and I appreciate you uh, doing so with a very humor. You're a great human. Finally, several of my Republican colleagues and I sent a letter to you discussing the vice chair supervisors Vice Chair of supervision Michael Barr's plan to conduct a holistic review of Capital standards I Look forward to discussing those Capital standards uh during my Q A and I will thank you for our recent conversation that we had that uh helped illuminate some of the necessary challenges that we face as a nation and your answers to it.

Thank you thank you speaking of Illuminating Thank you All right thank you today! Well yeah, today we'll hear from chair of the Federal Reserve Jerome Powell Monetary Policy, Economy and I Don't expect Chair Apollo to weigh in on the mini debate we just had. but I think we all know that the debt increase was much larger under President Trump and a Republican Senate than it has been since. Um, Chair Paul Thank you for your service and your testimony today Chairman Brown Uh, ranking member Scott and other members of the committee I Appreciate the opportunity to present the Federal Reserve's semi-annual report. My colleagues and I are acutely aware that high inflation is causing significant hardship and we're strongly committed to returning inflation to our two percent goal.

He says this speech all the time. Over the past year, we've taken forceful actions to tighten the stance of monetary policy. We have covered a lot of ground in the full effects of our tightening so far are yet to be felt. Even so, we have more work to do.

Our policy actions are: Guided By our dual mandate to promote maximum employment and stable prices without price stability, the economy does not work for anyone in particular. Without price stability, we will not achieve a sustained period of labor market conditions that benefit all tests and same support. I'll review the current economic situation before turning to monetary policy. The data from January on employment, consumer spending, manufacturing, production, and inflation have partly reversed the softening trends that we've seen in the data just a month ago.

Yep, some of this reversal likely reflects the unseasonably warm weather in January in much of the country. Still, the breadth of the reversal, along with revisions to the previous quarter suggests that inflationary pressures are running higher than expected. Yep, at the time of our previous, Market if OMC not good for the market. From a broader perspective, inflation has moderated somewhat since the middle of last year, but remains well above the Fomc's longer run objective of two percent.

The 12-month change in total Pce inflation has slowed from its peak of seven percent in June to 5.4 in January as Energy prices have declined and supply chain bottlenecks heavy. East Over the past 12 months, core Pce inflation, which excludes the volatile food and energy prices was 4.7 percent as supply chain bottlenecks have eased and Tighter policy as restrained demand inflation in the core Goods sector Has Fallen And while Housing Services inflation remains too high, the flattening out in rents evident in recently signed leases points to a deceleration in this component of inflation over the year ahead. That said, there's little sign of disinflation thus far in the category of Core Services excluding housing, a category that accounts for more than half of core consumer expenditures. To restore price stability, we'll need to see lower inflation in this sector, and there will very likely be some softening in the labor market conditions.

Although nominal wage gains have slowed somewhat in recent recent months, they remain above what is consistent with two percent inflation and rehearsal happening on NASDAQ Watching the resistance is good for workers, but only if it's not eroded by inflation turning to growth. If the US economy has slowed significantly last year, with real GDP rising at a below Trend pace of 0.9 percent. Although consumer spending appears to be expanding at a solid Pace this quarter, other recent indicators point to subdued growth of suspending of spending and production activity in the housing sector continues to weaken, largely reflecting higher mortgage rates, higher interest rates, and slower output growth also appear to be weighing on business fixed investment. Despite the slowdown in growth, the labor market remains extremely tight.

The unemployment rate was 3.4 percent in January, its lowest level since 1969. Job gains remained very strong in January while the supply of labor has continued to lag as of the end of December, there were 1.9 job openings for each unemployed individual close to the all-time Peak recorded last March While unemployment insurance claim claims have remained near historical lows, turning to monetary policy with inflation well above our longer run goal of two percent, and with the labor market remaining extremely tight here it goes. Breaking policy has continued to tighten the stance of monetary policy, raising interest rates by four and a half percentage points over the past year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to two percent over time.

In addition, We are continuing the process of significantly reducing the size of a balance sheet. Watching for the reduction here, the effects of our policy actions on demand in the most interest sensitive sectors of the economy. it will take time, however, for the full effects of monetary restraint to be realized, especially on inflation. In light of the cumulative tightening of monetary policy and the lags with which monetary policy affects economic activity and inflation, the committee slowed the pace of interest rate increases over its past two meetings.

We will continue to make our decisions, meeting by meeting, taking into account the totality of the incoming data and their implications for the outlook for economic activity and inflation. Although inflation. has been moderating in recent months, the process of getting inflation back down to two percent has a long way to go and is likely to be bumpy. As I mentioned, the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be to be higher than previously anticipated.

If the totality of the data were to indicate that faster tightening is warranted, we'd be prepared to increase the pace of rate hikes will likely require that we maintain a restrictive stance of monetary policy for some time. It's good for the Bears Marching focuses using our tools to bring inflation back down to a two percent goal and to keep longer term inflation expectations well anchored. He does say that all the destroying price stability is a sense essential to set the stage for achieving maximum employment and stable prices over the longer run. The historical record of cautions strongly against prematurely loosening policy.

We will stay the course until the job is done. To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. The Federal Reserve We will do everything we can to achieve our maximum employment and price stability goals.

Thank you getting rejected by that EMA Thank you Mr Chair there are watch out for selling pressure. Almost everyone will be here today. I Ask each of us to stay as close to the five-minute Mark as we can because we have votes at 11 30. So thank you all for your cooperation Chair: Paul Thank you.

Job growth is strong as unemployment remains historically low. You might not know that from the opening statements. many drivers of inflation, corporate greed Rising inequality, supply chain disruptions Russia's uh, bestiality if you will in Ukraine won't get better because of interest rate increases. Every indication is that this post-pandemic economy is different.

should we be worried Mr Chair that the FED is treating this economic period as it has in the past. instead of reacting differently, this guy needs to stop smoking. Thank you Mr Chairman Uh, So we've been aware since the very beginning and have said and discussed this uh public on many occasions that there are some differences this time. Uh, we in particular have not seen the kind of uh, supply side collapse that we saw at the very beginning of the inflation outbreak.

also the outbreak of a war which had significant effects on commodity prices a year ago. So all that is different. There are also there are some similarities there. There is a mismatch between supply and demand.

You can see that uh in in a good sector. Still, you saw it in in housing prices going up uh, over 40 percent since the Uh since before the pandemic. And you see it in the labor market where we have 1.9 job openings for every opening for every unemployed person. So we're well aware that that this this particular situation involves a mix of cycles of sorry no forces, not all of which are our tools can affect, but there is a job here for us to do in in Federal aligning Demand with Supply Okay understanding, you have limited tools to address inflation in our conversations.

Um, in the past to show my concern about continued rate increases, that that may not actually address the root cause of inflation, they hurt workers and I just like many of us content, we can't follow the same old Playbook uh question. Last year three banking closed updates on the Community Reinvestment Act to account for changes in our banking system. My question is, does the FED remain committed to work with FDIC and OCC to finalize the CRA Rule And when will that rule likely be finalized? Yes, we do remain committed and uh, I believe we are in a broad agreement with the other two agencies on on on the revisions to the rule. So now we're in the process of writing all that down and that'll take some time and then after that of course, uh, the it will come to the board of of Governors for a vote and that will involve briefings and and discussions.

And I I can't give you an exact date but as quickly as possible. Yes, but it will. it will be some months. Okay, thank you Um Banks Whether the shock of the Kova 19 shutdowns mostly because of the fiscal response provided by Congress, we now see a spike in loan delinquencies, an increase in overall risk.

banks are again plowing billions, billions as many other corporate leaders always defended by people on that side of the aisle. Um, in in the stock BuyBacks Which makes me concerned if there's a downturn in the economy Banks could end up with too little Capital That's why I'm worried about any potential rollbacks of safeguards or regulations. Can you assure me that the FED will keep Capital requirements strong and exercise more long-term forward-thinking than corporate CEOs that seem to be focused on the short term. I Can assure you rest of the first part.

All right, that will will keep Capital requirements strong I Didn't expect you to comment on you don't give me an opinion about you're looking more forward than than companies that look at the short-term benefits of stock. BuyBacks Uh, Mr Chair When you last testified to ask you about the risk posed by crypto assets stablecoin, the Fed, and other regulated possibilities. how's the FED Evaluating the risks of crypto related activities by your by your supervised institutions? So this is something we've been. We've been quite active in this area and and I'll say that uh, we We believe that Innovation is very important over time to the economy.

We don't want a stifle Innovation We don't want regulation to stifle innovation in a way that just favors incumbents and that kind of thing. But like everyone else, we're watching what's been happening in in the crypto space. and you know what we see is you know, quite a lot of turmoil. We see fraud.

We see a lack of transparency. We see run risk lots and lots of things like that. And so what we've been doing is is making sure that the that the regulated financial institutions that we supervise and regulate are careful are taking great care in the ways that they engage with the you know with the whole crypto space and that they give us prior notice and we've issued along with the FDIC and the OCC a number of of um you know issuances over of notices to that effect. Thank you and I will close with this I Long pushed for the FED to prioritize workers and for the leaders of the factory like reflect the diversity of our country.

We've made progress but our work is not done. We have a new opening. Understand it's not your job to appoint the new Fed Fed member. Uh, we have and we have a number of upcoming vacancies at the reserve banks.

I Support Senator Reid from Rhode Island Center Menendez from New Jersey and other colleagues who are pushing for more diverse, uh, diverse voices of the FED Senator Scott Thank you Chairman Obviously the Chairman and I both have strong passions about the challenges that we face in the country. The one thing that I do believe that we agree on is the importance of having a strong Capital markets as it relates to making sure that Americans have the ability to continue to grow their businesses and to solve their challenges. And frankly I hope that we get there. building all the same comment that Chairman had her own Capital standards is where I'm going to go with my thoughts today.

but I think back on these last few years. It's hard not to recognize extraordinary efforts. Our financial institutions of all sizes frankly undertook to administer a program like the PPP all while weathering is shut down of our global economy Higher thoughts. but from my viewpoint, our banking system was resilient.

Our financial institutions stepped up and delivered Aid to support families and businesses every single day. That's why Vice chair bars. Be careful here comments around holistic review of our capital Me so much we should be laser focused on our economy and addressing the needs of everyday. Americans Try and afford a new future and helping them open the door to opportunity.

As you and I both know, capital and its quality must be continually scrutinized, but increased Capital does not necessarily provide an increased benefit and requiring Banks to hold Capital that is not risk-based and appropriately tailored to a bank size. scope and activities can cause more harm than good at a time of record inflation where everyday needs are more expensive, we should not be pursuing actions that are harmful higher highs. Rather, we should be supporting the engine of our economy, small businesses. While I remain greatly concerned by the Vice chair's comments, I am hopeful that you will ensure this review is appropriate.

Keeping the impacts on our banking system front and center, we must promote and further the growth of our economy and thereby our people. Anything less should be unacceptable to that end. Will you commit that any ongoing Capital review by the Federal Reserve will follow the law and that any follow-on regulatory proposals will be risk-based and tailored to an institution's activity, size and complexity and not a one-size-fits-all Yes, I can easily commit to that. You know we're very strongly committed to tailoring and that'll be I Can say that anything we do will reflect Uh tailoring, which is a long-held principle for us and also now a requirement in the law.

Yes, sir, thank you very much! Two weeks ago I sent a letter with Chairman McHenry to Chair Ginsler regarding the Sec's Climate Disclosure rule, urging him to rescind his proposal and reminding him that the SEC is a market regulator not a climate forecaster. Much like Kai was designed the SEC to protect investors, to maintain Fair orderly and efficient markets and to facilitate Capital formation and not to advance Progressive climate change policies. Congress Designed the Federal Reserve to promote price stability and maximum employment not to play politics to that end I Find worrying the Fed's announcement of recent actions to consider climate related scenarios coupled with remarks by the Vice Chair of Supervision as attempts to incorporate broader ESD policies into the financial. Services System Banks have and continue to account for weather-related risks and their risk management, but efforts that attempt to predict climate change far into the future fall outside the scope of the of their Authority Importantly, the level of speculation required in these models should highlight their arbitrary and capricious nature.

At a time when our economy is suffering from historically High inflation I Expect our Central Bank to focus its time and resources on bringing inflation down, not on policy outside of his mandate. I Noted in my opening statement: a recent speech that you've given about the state of the Fed and how you should resist the temptation to broaden its scope and to address social issues. Do you agree that the Federal Reserve does not have the authority or statutory direction to use its monetary policy or supervisory tools to wade into the ESG or other climate policies. Two: I Do.

As you know, there is a there's a tightly focused role that we do have that I Believe that we have, but but I would agree with your statement. Yeah, Mr Chairman: I have 20 seconds left. But I'm going to defer because of my earlier questions of Albany State thank you Senator Scott Senator Menendez is close but not here yet so uh Senator Senator rounds so but nice try. thank you uh Mr Chairman First of all, welcome, Um, it's always good to have you in front of our committee.

Um, Core and headline inflation have remained persistently elevated and over the past 12 months real average hourly earnings fell by 1.8 percent about four percent since President Biden took office to make ends meet as prices increase more Americans are leaning on credit cards. At the end of 2022, credit card debt hit a record of 930.6 billion dollars and 18.5 Spike from a year earlier and an average credit card balance Rose to 5805. Over the past year, the FED has acted aggressively to tame inflation and yet we are still seeing price increases and as we've discussed this several times. but I recognize that it's been an ongoing discussion.

but I believe that this further proves that we have long been feeling the effects of a policy-induced inflation resulting from Decisions by the byte Administration primarily cutting off uh, the the Uh, the resources necessary to improve and increase domestic energy production. I Continue to be concerned that if you attempt to use the tools that are available at this time for the FED uh that I believe that we're going to have a challenge of not being able to address specifically the challenges brought out when you have a policy. watch out what the resistance on the moving average with regard to to energy for all of our Bulls as opposed to what you're trying to do which is to bring down the total overall cost I Just wanted to ask I guess and you're going to think this is something that we've heard before. but do you believe that you currently have the monetary policy tools to actually reduce inflation? and I Just put it in this perspective.

In January of 2021, the CPI was 1.4 percent when the by the administration began in January of 2022 and this is before the Russian invasion of of of Ukraine CPI was at seven and a half percent. Seven point five percent today. March of 2022 CPI is 8.5 percent. Wouldn't it be fair to assess that a lot of the policy or the inflation that we've seen here may very well be due to policy Decisions By this Administration they're just pointing together, not for us to uh to point fingers.

our job is to use our tools. You asked whether we have the tools to get this job done and we we do. Over time there are some things that we can't affect, but over time we we can achieve two percent inflation and and we will. In other words, you've got a limited number of tools available to you and The Limited number of tools that you have are designed to impact simply the reduction in prices and so forth and yet didn't reject it.

There are competing meetings out there that are pushing prices higher. You don't have the wherewithal to decide one tool versus another based on whether it's policy induced or whether it is a matter of a shortage in supplies from outside or whether it's War related. That's right, our tools essentially work on demand, moderating demand. so that's that's what we can do.

So if there were policies in place that actually help to reduce inflation, in other words, and by that, I'm just going to look at energy alone just as a good example. If policies were in place that were actually allowing Energy prices to come down in the United States then you would have less of a need to use the very blunt tools that you do have right now with regard to increasing rate increases. Is that a pair statement, sir? In a sense it is. But I would just say on Energy We I'm not trying to get you to a policy discussion with with what the President's doing on his on his energy policy I Just want to make it clear that you have to respond to what's in front of you and it doesn't matter where the inflation is coming from or what's driving it up, you're simply trying to bring it back down to that two percent number with with the only tools that you've really got.

Yes, but I will say on energy, energy has tended over time time to fluctuate up and down and is not. It's not mainly affected by our tools, so um, the things we look at are the thing are really things that are tightly linked to demand in the US economy those we can affect and I think just the fact that you've been increasing inflate or you've been increasing into interest rates and yet inflation continues to ride up would suggest. Just as you've just indicated that when you have high energy prices, it's tough to impact that part of it with the power the monetary policy that you've got available to you. So we're really.

we focus on everything, but we also focus on core in particular, which doesn't include Energy prices. And what's happened is core core inflation has come down, but nowhere near as fast as we might have hoped and it has a long way to go. Thank you! One last question last: June Vice Chairman of Supervision Michael Barr Testified before this committee that he would defend Watch for the break below EMA Navigation Method as an alternative approach to the insurance Capital Standards The ICS proposed by the Iais as the final compatibility criteria is set to come out later this year. Can you confirm that you share Vice Chair Bars views on this Am I Will confirm that, but I'll have to get back to you on the status of that.

Okay, thank you thank you Mr Chairman Friendly reminder Jerome Powell is also going to be speaking tomorrow and the CPI data report is next week on the 14th. I will be live streaming it for free on our YouTube channel. so all we literally ask you to do is drop a thumbs up and subscribe to the channel and most importantly, turn on your post notifications because if you don't, YouTube will not notify you when we go live for this inflation report. Probably even more important than these live streams representation in the Federal Reserve's leadership.

In 109 year history of the Federal Reserve there has never been a single member of the Board of Governors or Regional Bank president who has the lived experience of being Latino in the United States And in practice, that means that the voices of nearly one-fifth of our country's people are repeatedly drowned out. When the FED is making critical decisions on economic policy decisions that affect whether a Latino family can afford their first home, find a job that pays their living wage, send their children to college, save for a comfortable retirement, or get a loan to expand their business. Right now, the Biden Administration has a clear opportunity to make history. Its next nomination to the Board of Governments Testing Support Range here Identified a number of all the five Latino candidates who have dedicated their career to the fields of economics who are committed to the Fed's jewel mandate.

Watch for the break below Independence Of the Central Bank the Administration has rightly nominated and advocated for a number of diverse candidates with similar qualifications both at the Fed and elsewhere. But despite having five opportunities over the past two years to nominate a qualified Latino Economist to serve at the Federal Reserve this Administration has repeatedly chosen not to representation or lack thereof does not happen by accident. It is a choice. And I hope the administration makes the right choice.

I mean I'm Latino myself I Have no understanding of what about anything to do? Would you say that what's currently going on? Um, ridiculous. It true. Isn't that the United States dollar is the reserve of choice of the world? Yes, I would. And that brings those enormous benefits.

Is it done? Yes, it does. Now 12 years ago, Republican House brought us to the brink of defaulting on the debt for the first time in history of this country, jeopardizing our credit and the world economy. I'm getting a sense of Deja Vu because once again of what Republicans are recklessly demanding Draconian Spending cuts to programs that hard-working U.S families rely on in exchange for allowing the treasury Department to pay for spending that Congress including most of them have already voted to authorize. You want to talk about spending cuts? It seems to me that the budget is the time to do that, but not to put the full faith and credit of the United States is risk.

Chairman Kapow, can you talk about the catastrophic damage a debt default would inflict on the economy? Like look at this. Cartier because it really matters between the Executive branch and and Congress We do not seek to play a role in these policy issues, but at the end of the day, there's only one solution that to this problem and that is Congress Whatever else may happen will happen. but Congress really needs to raise the debt ceiling. That's the only only way out in a timely way that allows us to pay all of our bills when asked to and if we fail to do so.

Um, I Think that the consequences are hard to estimate, but they could be extraordinarily averse, adverse, and could do long-standing harm well. it. I I Think that's a that's a mild statement of what would happen. Uh, I Understand I Didn't ask you to engage in the Congressional executive branch roles.

I asked you about the the abstract question of what happens if you have a debt default. Uh, isn't even this constant fight putting into question the possibility that the United States will not honor its full faith and credit have consequences within the economy? In principle, it could. I Think markets tend and observers tend to watch this and tend to think that it will work out and it has in the past worked out so it needs to work out this time too. Now seeing your your testimony before the community support say that you'll do whatever is necessary to tame inflation.

I We have a do We serve a dual mandate and we will. We will do what we can everything we can to restore price stability while also serving maximum employment. And primarily that means uh, additional rate increases. Would it not because what other tool do you have? That's what we have.

The balance of the balance sheet will continue to JP telegraphy of course. So the question is, when does that part of doing anything necessary to tame an employment I mean to tame inflation come into conflict with your other Mandate of Maximum employment unemployment in 54 years and where we have you know a labor market that is Uh, it takes extremely tight. Uh, extremely so. but in in that that time could come but it really isn't Now where we're very far from our Uh from our price stability mandate and in effect the economy is past uh most estimates of of Uh of Maximum employment.

Thank you Watch for the reversal. Thank you Mr Chairman uh Chairman Powell Thank you for being here. Thank you for to you and your team or helping to save the economy during the Pandemic meltdown. Jesus What it's worth I'm generally supportive of the actions of the FED right now and I'm not going to ask you the debt today to blame anybody.

Um, when Congress spends money, it stimulates the economy. Does it not well. It would depend on whether that's funded by tax increases or not. But so if there's a spending that's that's not accompanied by taxes would have a net at the margin stimulative effect.

s money to spend even more. that stimulation economy even more. Does it not at the margin yet? Okay, higher highs. Watch out for the Bulls If Congress reduced the rate of growth in its spending and reduced the rate of growth in its debt accumulations, it would make your job easier in reducing inflation.

Would it not just reducing their balance sheet into things? I Don't think fiscal policy right now is a big factor driving inflation at this moment, but it's absolutely essential that we do slow the pace of growth. particularly for the areas of all right, let's try to unpack this then. I'm not trying to trick you. You're raising interest rates.

You're raising interest rates to slow the economy, Are you not? Yes. To cool the economy off. Um, and one of the ways you measure is your fluctuation and gross domestic product. Is the unemployment rate? Is it not? Yes, One of the measures.

Okay, so in effect, I'm not being critical. When you're slowing the economy, you're trying to put people out of work. That's your job. Is it not not? really.

We're trying to. We're trying to assure price stability. No, you're trying. You're trying to raise.

It's not wages. You're trying to raise the unemployment right? I Know you don't like the phrase. so let me strike it. you're trying to raise the unemployment rate On it.

You're not. Now, we're not trying to raise it. We're trying to realign supply and demand. which could happen through a bunch of channels like for example, uh, you know, just job openings.

We put it in another way. Okay The Economist Did a did a wonderful study. They looked at at 10 disinflationary periods in America Going all the way back to the 1950s disinflation is what you're trying to do. It's a slowing in the rate of inflation.

Am I right? Yes, in other words, prices don't go down. They just don't go up as fast. deflation is. when prices actually go down.

You're trying to achieve disinflation. Are you not? Yes, we are okay based on history. In the 10 times that we got inflation down disinflation since the 1950s, in order to reduce inflation by two percent, unemployment had to go up 3.6 percent. Now that's history, is it not? I Don't have the numbers in front of me.

But yes, the standard has been that there have been recessions and downturns that Fed has tried to reduce. Now right now, the the current inflation rate 6.5 four percent and the current unemployment rate is 3.4 percent. Now if history is right, I'm not asking you to to again blame anybody, but if history is Right unless you get some help in order to get inflation down from 6.4 percent to let's say 4.4 percent and the unemployment rate is going to rise to seven percent based on history, That's what the record would say. Okay, and to get inflation down to 0.2 percent, unemployment would have to go to 10.6 percent Would it not? No.

I wouldn't I wouldn't That's what the records. That's what the history shows. Yeah, yeah, I don't think that kind of a number is is it at all? I know you're reluctant to admit it and you don't want to get in the middle of this policy. uh, dispute.

But I think it's undeniable. It's undeniable that the only way we're going to get this sticky inflation down is to attack it on the monetary side which you're doing and on the fiscal side. Which means Congress has got to reduce the rate of growth of spending and reduce reduce the rate of growth of death accumulation. Now I get that? you don't want to get in the middle of that fight.

but the more we help the Bears are back on the physical side. Let me see it. drop a thumbs up if you're a bear. Isn't that a fact? Yes, when you raise interest rates, it slows down the economy and Sir unemployment goes up.

Yes sir, Thank you thank you sir. Kenny Senator Reid of Rhode Island's recognized. Thanks very much Mr Chairman Uh thank you Chairman Uh. Being here today, Uh, we saw in the wake of covert, the globalized supply chain disrupted significantly and we're in the process in some respects of rebuilding a supply chain with emphasis on sourcing in the United States What extent did that disruptive supply chain contribute to inflation? And to what extent will the new oh my goodness, the new supply chain that is located in the United States and other friendly countries affect inflation? So the initial outbreak these are the people that are running our country that are making policy for the Next Generation Look at this guy went way up and the global Supply chains Supply changes the original inflation.

It is now spread over the last two years to housing and also to the rest of the service sector. So to your question we are seeing Goods Prices Goods Inflation has been coming down for some time now. it's still too high, but it's coming down. Housing Services Uh is is there's in the pipeline.

You see the new leases that are being signed and what that tells you is that in the next six to 12 months we will see that come down. But this big service sector that's everything else which is financial services, medical services, travel, and Leisure all of those things that's really where this that's the source of the inflation we have now which had nothing to do with the supply. there not much to do with the support and is there anything you can do that would Target that service area without affecting the other areas. There's not really.

You know we are. Our monetary policy tools are are famously powerful but blunt. Uh, a different topic and that is is you probably aware of The same Support Circuit delivered a ruling in the Community Financial Services Association versus Cfpb that the Cfpb's funding mechanism is unconstitutional. What? Um, just like the Board of Governors, the Cfpb is a bureau of the Federal Reserve.

both the Board of Governors and Cnpb rely on the same source of funds and draw on those funds with virtually identical ways. If the Board of Governance funding structure will be found unconstitutional, what would the implications be for the country and monetary policies? JP I'd be like what'd you say it would be very significant, but I I Have to say we have significant responsibilities, but I would be reluctant to comment on a case that's before The Supreme Court Uh, but it is A It is certainly something that you've had people examine for possible ramifications. Yes, and you know the central banks tend to be self-funding because of the way that the way they work and that's a key factor of our independence. And uh, you've indicated previously that wages, uh, have not been spiraling upwards necessarily, and that inflation expectations are currently stable.

Um, but the impact on increased interest rates are usually felt more by low to moderate income people lower high. Is there any way you can work yourself out of that dilemma? Um, so where we are right now, of course, is very low unemployment. Wages have been moderating and they've been doing so without. Uh, softening in the labor market without a rising unemployment, really.

And that's a good thing. So um, we really don't know this. The current situation is a combination of more typical supply and demand issues, but also just things that we haven't seen before. Update your alerts, we're in Ukraine Like this, like the supply chains that you mentioned.

so we have many unusual factors and I Don't think anybody knows with confidence how this is going to play out. Thank you very much Mr Chairman thank you I Don't know about you guys, but you know how there's a limit on how old you must be I Feel like there should be a limit on how old you can be to still be in Congress or in any political position that will grant you access to creating policies for the Next Generation I Don't know about you guys, but I just feel like that's common sense and 22 seven percent. And in 2022 it was 6.5 percent according to the U.S Department of Agriculture The cost of food went up 10 in 2022. Oh no.

And the real effects of that is moms and dads across this nation that are working to put food on the table for their kids for their babies had a harder time doing that. This has devastated hard-working Americans Causing a kitchen table crisis in every corner of our country as the price of food, energy, and housing have all skyrocketed. In response, the Federal Reserve has raised the Federal Reserve fund rate more than four percentage points. Being far from transient, inflation has remained persistent, high and well above the Fed's long run goal of remaining under two percent in the coming year.

What factors and indicators are you paying attention to? As you and the Federal Open Market Committee decide on whether to increase rates? Clear and concise. So um, first we're looking. We're going to be looking at inflation in the three sectors that I mentioned: the good sector, the housing sector, and then the broader service sector. Watch for the lower lows.

For me, lower highs inflation. It's already overload. A good sector to continue, and that's really important in in the in the housing sector. we just need the time to pass so that that reported inflation comes down, and it's effectively in the pipeline as long as as long as new leases are being signed at relatively small increases.

So we'll be watching very, very carefully. Though at at the larger service sector, which is 56 percent of the of consumer spending and more than that of what of what's currently inflation. So that's one thing we'll be, we'll be watching that very carefully. Also, we raised rates very quickly last year, and we know that monetary policy tightening policy has.

there are those effects It takes a while for the full effects to be seen in economic activity and inflation support. so we're watching yourself to see those effects coming, uh, into play. So we're and we're We're aware that we haven't seen the full effect shade and we're taking that into account as we as we think about rate hikes. Looking at this policy discussion discussion, we're an increase of energy production in this country.

Do you feel like that would help drive down inflation? Well it I think over time more energy would mean prices. but we we were very focused on the on the on what we call Core inflation because that really is. that is what is driven by. you know really by demand.

Our trolls are really aimed at Demand right understood. But I feel like the cost of energy is not just what you think it ends up effect every good. It's a great nation. Additionally, I'd like to ask you for participation.

So when you look at the unemployment rate and we've heard my colleagues discuss people having to be displaced in order for us to maybe get to the inflation rate that that we would like as a nation, I'd like to focus on the labor participation rate. So right now it's 62.4 If there were an increase and people coming back into the workforce, um would that be a positive factor with regards to driving us down to the two percent rate that you would want to achieve? I Think that it would I Mean remember those people coming into jobs that would be that would be great because the economy clearly wants more people than are currently working. Of course those people would then spend more so it wouldn't be a zero-sum game, but it would be great for the country and great for them if they were to come to the labor force. Amen.

Um I Believe that increasing in capital requirements on financial institutions would have a chilling effect on the economy and the availability of financial services. And last week I joined many of my colleagues in sending you a letter that expressed concerns that if the Federal Reserve decides is to conduct a quote holistic review of capital standards as we heard Senator Scott talk about earlier. So is the Federal Reserve Concerned that the impact to the economy of increasing Capital requirements on financial institutions at a time when inflation remains persistently high would would cause an issue? So I think it's always a balance. We know that higher Capital makes Banks safer and Sounder we also know that you're you will at the margin provide less credit the more Capital you have to have I So, but I think it's It's never exactly clear that you're a perfect equilibrium and it's a fair question.

I Think to look at that and I know, um, out of respect for the Chairman and trying to stay in my time, I Will just end by saying um I heard what you said Obviously, as you have said, the Federal Reserve Reserve is not and will not be a climate policy maker I Just want to thank you for your public statement on that I Agree with you that there's a difference between policy makers and financial regulators and certainly look forward to working with you in the future. I Like her, she's my favorite out of everyone else. Thank you Mr Chairman Chairman Palance Good to see you again! Let me start by saying anyone who's asking questions or either pounding you for how quickly we're going to drive that inflation back to two percent or pounding you on making sure that we don't push the economy into a recession and try to drive up unemployment I Got to tell you, you know and it's uh, these are maybe not the cheap seats uh, but I actually think you've done a pretty good job in in terms of both ratcheting uprights and then starting to tail tail off a little bit. I Think we all were concerned by the January numbers where it popped up a little bit more.

um I Wish Mr Chairman we're actually having this hearing two weeks from now because we're gonna have a lot more data later in this week and next week. But I want to net net? Um, it's You know we've still got ways to go and the January numbers were concerning. but I do think your tailored approach. Um, we can all second guess.

but I think it it has been the right approach. I'm going to commend you on that I Want to get into get two questions in one. One of the areas that I am very worried about is commercial debt. I mean we've got a Bloomberg story here showing you know we're going to hit a six trillion dollar wall this year on refinancing.

Where I'm particularly concerned is the issue around commercial real estate. Um, you know, as we recover from covert, a lot of things are getting back to normal, but clearly the transformation of where people work is going through a fundamental transition and uh, I hope people to return more to the office, but lots of folks prefer working working elsewhere. That's going to fundamentally change the real estate market. Uh, in on the commercial side and I Do believe we're going to hit and potentially a cliff here of of a totally unexpected problem in terms of commercial real estate.

How are you looking at that issue and recognizing there's lots of bumps coming out of open this one I Think it's safe to say that you can tell the clear difference between a younger Congress lady versus an old. Congressman I Mean it's like night and day difference? They can't even art like properly articulate their question. You don't see a big spike going on or anything like that. Um, however, of course there are pockets of of concern and particularly you pointed to Um C2 uh, the refinancing Spike That has to happen and I've seen those come and go before and generally markets can absorb them.

maybe at a much higher rate this time, but it's something that we were well aware of and watching carefully in terms of cre. I would agree with you the the The: the occupancy of Um of office space in many major Uh cities is just remarkably low and and you you wonder how that can be as over time some of that's going to be made into Condominiums and things like that Since we don't, we don't seem to have quite enough housing in some places. Um, but the question is, what's the financial stability risk? It's it's not great for regular institutions, don't tend to have a lot of direct exposure to that. some smaller Banks actually do medium and small size Banks Do we carefully monitor it? We we agree that that's a that's a an area that requires a lot of monitoring and um, you know I'd say we're on the case so well that will morphed me into my last question.

something we've talked about in a lot of my colleagues have talked about with the large institutions. Otherwise I mean I I Do think even some of the biggest critics of Dodd-Frank I think would acknowledge their banking system is a heck of a lot stronger and then was able to withstand um, uh, coveted in a very healthy way. It sounds like this guy has a lot of commercial real estate. Of all this, a vast amount of financial institutions move beyond the regulatory perimeter.

You know the fact that we now have way over half of the mortgage origination coming from non-financing institutions because a lot of the the large entities hedge funds, other funds that may be doing some of this commercial debt or some of the cre debt. um I'd like you to talk generally in the last 40 seconds or so of you know how you think about this regulatory perimeter. I'm a big believer and I know some of my colleagues are that you know that we ought to look less at Charter and look at same risk. same regulation maybe as a as a guiding principle and senator's been working on some work.

I've been working on working on crypto around that that area, but there's a vast amount of activity that's taking place outside the regulatory perimeter. How should we be thinking about that? And how do we make sure that doesn't create the kind of uh crisis sneak up that happened in 2008 on the non-regulated side of the house. I Think you articulated the principle very well. It's same activity, same regulation, and that's that covers crypto and all kinds of other activities people are going to assume when when they deal with something that looks like a money market fund that it has the same regulations money market fund or bank deposit and so stable coins need need some attention in that respect.

I Just think that's that's the basic principle and you're right, so much of of our so much of intermediation has moved away from the regulated. Banks really for a long period of time and we got to keep an eye on that. We think I'm sure. well we can keep looking at it.

Thank you so much Senator Vance I'm sorry Senator Hagerty of Tennessee Thank you Chairman Brown Thank you very much Ranking Member Scott for holding this hearing Chairman It's great to see you again here. I Appreciate your presence and I appreciate the opportun