Jared Bernstein, chairman of Joe Biden‘s Council of Economic Advisers, appears to be utterly ignorant of how the Federal Reserve and U.S. Treasury Department work together to impact the country’s macroeconomic conditions. In an interview in a new documentary discussing Modern Monetary Theory, Bernstein struggles to describe how the U.S. government increases or decreases the monetary supply by purchasing or redeeming Treasury securities — and how this impacts the national debt.
“The government definitely prints money. And it definitely lends that money, which is why, um, the government definitely prints money,” Bernstein says, stumbling over a primary function and interplay between the Treasury and Federal Reserve. He continues, questioning the accuracy of his understanding: “And then it lends that money by selling bonds. Uh, is that what they do?”
“They, they, um, they, yeah, they, um, they sell bonds, yeah they sell bonds,” Bernstein continues, still struggling to articulate how U.S. monetary policy functions. He adds: “They sell bonds, and people buy the bonds and lend them the money.”
In reality, the U.S. Treasury Department auctions bonds and other securities to the Federal Reserve, foreign nations, American citizens, and other government agencies to cover federal spending that exceeds tax receipts and other government revenues. Regarding the Federal Reserve specifically, the Treasury prints U.S. currency for the central bank — selling it to them at cost. The currency is then distributed by the Federal Reserve to various banks and financial institutions or sold back to the Treasury through securities auctions.
The government does not generally lend money; this is the purview of the Federal Reserve. Bernstein, however, is at least partially correct that individuals and institutions who purchase Treasury bonds are lending the federal government money.
WATCH:
Jared Bernstein is the Chair of the Council of Economic Advisers, the main agency advising Biden on economic policy.
He seems absolutely clueless about how the Treasury and the Fed function.
Scary how stupid this guy is.
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— Wall Street Silver (@WallStreetSilv) May 3, 2024