Editorials

AOC and progressives call on Biden to dump Powell as Fed chair

Reps. Alexandria Ocasio-Cortez, Rashid Tlaib and Ayanna Pressley have called for Federal Reserve Chair Jerome Powell to be replaced by someone who is a climate change activist.

Progressives believe under Jerome Powell's leadership the Fed has done little to mitigate the risk climate change poses to our financial system. The leading candidate to replace Powell is Fed Governor Lael Brainard, a PhD. economist from Harvard who has published papers on climate change and equality. The Green New Deal is a 14 page proposal submitted to the U.S. House of Representatives by Rep. Alexandria Ocasio-Cortez  The Green New Deal goals include: clean energy, high-speed rail, job guarantees, health care, green housing and food security. The estimated costs range from $51 trillion to $93 trillion between 2020 and 2029. 

Because of limitation by debt ceilings, large federal deficits, and growing national debt, the Green New Deal seems to have little chance of passing in today's Congress. To fund a project as massive as the Green New Deal, progressives need a mechanism that neither raises the current deficits nor adds to the federal debt. Such a mechanism would be set up a network of public banks or NGO banks to fund the Green New Deal.  Roosevelt's New Deal was largely funded through the Reconstruction Finance Corporation (REC). Its funding source was the sale of bonds, but proceeds from the loans repaid the bonds, leaving the RFC with a net profit. The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms, and much more.   

Progressives envision funding with "a combination of the Federal Reserve and new public banks or a system of regional and specialized public banks". The banks could include banks owned locally by cities and states. The Federal Reserve would guarantee bonds issued by banks, which could make loans to finance infrastructure and the Green New Deal.  Lael Brainard as Chairman of the Federal Reserve could be a financial czar who could help implement the Green New Deal through banks, without constraints by Congress.
 

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