Peter Schiff: The Fed Will Bank on Biden in 2024
The Federal Reserve will play a pivotal role in the upcoming election and aim to boost President Biden or another Democratic candidate.
I think that the Fed is going to be doing everything it can to try to reelect Biden, or whoever may run if Biden does not. I think it’s clear that that’s what’s going to happen.”
The President has the power to nominate the Federal Reserve chair, making this authority a crucial factor in shaping the Fed’s decisions. As a result, the Fed chairman, in this case, Powell, is incentivized to align with the President.
This isn’t necessarily a left-wing bias (although, Powell and the left-wing establishment enjoy a cozy relationship). The Fed chairman’s alignment with the President transcends party lines:
It really doesn’t matter the party affiliation of the Fed chairman… What matters is who is in the White House at the time. Because the Fed chairman always wants to play ball with whichever administration is in power.”
That’s just how the game works.
Outside administrations are okay with this, because the quid pro quo relationship benefits the new administrations as well.
Peter calls this the unwritten rule:
And I don’t think outside administrations hold a grudge, because basically what happens is the Fed is going to try to help reelect whoever is in office. And so, if the opposing party wins, now the Fed is on their side. They’re not really going to call them out or get mad at them for helping the past president when now they’re the president and now the Fed has got their back. That’s kind of the unwritten rule. The Fed always favors the incumbent. Now why? It’s the incumbent that can renominate them.”
But this time, Powell is even more likely to support Biden, because there is bad blood between Powell and Trump:
Because even though Trump appointed Powell initially, he criticized Powell repeatedly when he was president…Powell pretty much knows that his job ends with a Trump presidency. Trump is not going to renominate Powell. I think there’s a lot of bad blood there between Powell and Trump. He knows his job is on the line, too, so that’s another reason to really try to help Biden get elected.”
Plus, with the tight race and weak economic conditions, Biden’s success heavily relies on Powell’s support.
I expect the Fed to act in an election year where the basic economy is very weak. And everybody is trying to pretend that it’s great and trying to convince the public that the economy is booming. The Fed is going to be a big part of that deception. The only hope Biden has of pulling this off is with the cooperation of the Fed. If he doesn’t get that cooperation there’s no chance.”
Fed intervention to support a Biden reelection is just one of several other reasons why Peter thinks 2024 could be a horrible year for the dollar.