The head of the United States Federal Reserve has admitted current economic policy is “not sustainable” — but that it is not its job to fix it.
Speaking during testimony before Congress’ Joint Economic Committee on Nov. 13, Jerome Powell noted that currently, U.S. national debt is growing faster than nominal GDP.
Powell: Solving debt spiral “not up to the Fed”
“Ultimately in the long run that’s not a sustainable place to be,” he said. Powell continued:
“How to fix that — it’s easy to say that — how do you do that and when do you do that is an issue that is up to you and not to us.”
As Cointelegraph reported, U.S. debt has now topped $23 trillion — around $70,000 per head of the population, or more than $1 million for each Bitcoin that will ever exist.
On the night of Nov. 14 alone, the Fed distributed funds to banks worth 12.7 million BTC, while its balance sheet is expanding towards $4 trillion.
For Powell, however, resolving the debt crisis simply means making growth beat debt, and even failure to do so would not equal chaos.
“I would be remiss in not pointing out that the consequences of not addressing it is just that… our kids and grandkids will be spending their tax dollars servicing debt rather than on the things they really need,” he continued.
Trump wants negative interest rates
The comments came as U.S. president Donald Trump renewed calls for negative interest rates — effectively charging savers to store fiat currency — and criticized the Fed for not introducing them.
“Remember, we are competing with nations who openly cut interest rates so that now many are actually getting paid when they pay off their loan… who ever heard of such a thing? Give me some of that, give me some of that money,” he said in a speech to the Economic Club of New York.
Debt-driven economic policy and its consequences were the main motivation behind Bitcoin (BTC), which appeared after the 2008 economic crisis.
As hard money with a deflationary supply impossible to manipulate, Bitcoin is increasingly compared to gold as a hedge against the constant erosion in the value of fiat currencies.