America’s $2 Trillion Crush on Jerome Powell Will Disappear Come Payback Time

  • More Americans have confidence in Jerome Powell than any Federal Reserve chair since Alan Greenspan.
  • His decisive $2 trillion stimulus packages mean more Americans think he will do the right thing than Donald Trump.
  • But how will Americans react when Powell’s generosity ends, and the bill has to be paid?

America has a soft spot for Federal Reserve chairman Jerome Powell. The central banker has gained popularity due to his quick actions in mitigating the effects of the coronavirus pandemic.

But it’s easy to love the man whose nine emergency support packages will total more than $2 trillion.

Fed Chairman Jerome Powell is trusted more than President Donald Trump and Treasury Secretary Steven Mnuchin. | Source: Bloomberg

What About When Powell Wants It Back?

The idea of paying this money back hasn’t been uttered out loud in America.

In the U.K., chancellor Rishi Sunak has continuously made it clear ‘we all have to foot the bill‘ for his country’s rescue packages.

But what is Powell, or his successor, going to do?

Money for nothing? That’s the big question yet to be answered. | Source: Twitter

The likely answer will be to raise taxes. Of course, the chair of the Fed doesn’t have a direct say over taxes but is likely to party to discussions about how to repair the country’s balance sheet.

Some commentators have suggested a wealth tax that could reap $2 trillion.

Consumer-related levies, such as value-added taxes or carbon taxes, could help support the federal income tax to recoup the money spent.

And changes to how estates are taxed upon death could also prove lucrative for America’s coffers.

However It’s Done, It’s Going to Be Big

According to economists polled by Bloomberg, near-zero interest rates in the U.S. will remain until 2023, and the Fed’s balance sheet will surpass $10 trillion.

So will Powell, or his successor, be so popular when the generosity ends?

It seems unlikely.

Federal income taxes will not be enough to repay the stimulus…

Source Link