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      Why Ron DeSantis Is Taking Aim at the Federal Reserve

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      Florida’s governor has been blasting Jerome H. Powell, the Fed chair, while spreading misinformation about central bank digital currency.WASHINGTON — Gov. Ron DeSantis of Florida, who is preparing to take a widely anticipated leap into a 2024 presidential campaign, appears to have discovered something that populists throughout history have found to be true: Bashing the Federal Reserve is good politics.Mr. DeSantis has begun to criticize Jerome H. Powell, the Fed chair, in speeches and news conferences. He has alleged without evidence that the Biden administration is about to introduce a central bank digital currency — which neither the White House nor the politically independent Fed has decided to do — in a bid to surveil Americans and control their spending on gas. He has quoted the Fed’s Twitter posts disparagingly.His critiques echo a familiar playbook from the Trump administration. Former President Donald J. Trump often blasted the central bank during the 2016 campaign and while he was in office, as policymakers lifted interest rates and slowed economic growth. Mr. Trump at one point called Mr. Powell — his own pick for Fed chair — an “enemy,” comparing him to President Xi Jinping of China.Because the central bank is responsible for controlling inflation, it is often blamed both for periods of rapid price increases and for the economic damage it inflicts when it raises rates to bring that inflation under control. That can make it an easy political target.And populist skepticism of government control of money dates back centuries in America. The nation’s first and second attempts at creating a central bank failed partly because of such concerns. The Fed, set up in 1913, was designed as a decentralized institution with quasi-private branches dotted around the country in part to avoid concentrating too much power in one place. It has been the subject of conspiracy theories and political attacks ever since.“In many ways, it is not surprising at all,” said Sarah Binder, a political scientist at George Washington University who has studied politics and the Fed. Mr. DeSantis is placing himself to Mr. Trump’s right, she said, “and it sounds like many populist right-side critiques of the Fed, of monetary control, that we’ve heard throughout history.”Mr. Powell has stated that the Fed “would not proceed” on a digital currency “without support from Congress.”T.J. Kirkpatrick for The New York TimesWhile Mr. DeSantis’s Fed-bashing is not new, some of his remarks have strayed into misinformation, said Peter Conti-Brown, a lawyer and Fed historian at the University of Pennsylvania.“The Fed can and should take this seriously,” Mr. Conti-Brown said.While the Fed is independent of and largely insulated from the White House, it does ultimately answer to Congress. And a lack of popular support could curb the Fed’s room to maneuver: If the government decided that pursuing a digital currency was a good idea, for instance, the backlash could make it more difficult to do so.Mr. DeSantis’s tone could also offer hints about the future. Starting from the early 1990s, presidential administrations have largely respected the Fed’s independence, avoiding commenting on monetary policy. Mr. Trump upended that tradition. President Biden has returned to a hands-off approach, but the recent criticism offers an early hint that the détente may not last if a Republican wins in 2024.Mr. DeSantis has faulted Mr. Powell’s policies for failing to control inflation, recently calling the Fed chair a “complete disaster.”In Mr. Powell, the potential presidential candidate has a rare opportunity to criticize Mr. Trump and Mr. Biden simultaneously: The Fed leader was first nominated to the central bank by President Barack Obama, then made chair by Mr. Trump and renominated as chair by Mr. Biden.Mr. DeSantis has focused much of his attention on a central bank digital currency, or C.B.D.C., which would operate like electronic cash but with backing from the federal government. The Fed has been researching both the potential uses and technical feasibility of a digital currency, but has not yet decided to issue one. Mr. Powell has made clear that the Fed “would not proceed with this without support from Congress.”The digital money that Americans use today — whether they are swiping a credit card or completing a Venmo transaction — is issued by banks. Physical cash, by contrast, comes directly from the Fed. A central bank digital currency would effectively be the digital version of a dollar bill.Many people who think the Fed should seriously consider issuing a central bank digital currency suggest that it could help improve access to banking services. Some have argued that it is important to develop the technology: America’s global competitors, including China, are researching and issuing digital money, so there is a risk of falling behind.Yet critics have worried about the privacy concerns of a centralized digital dollar. And the dollar is the most important reserve currency in the world, so any technological issues with a digital offering could be catastrophic. That is why the Fed has pledged to proceed carefully — and why the idea of issuing a digital currency in America is only in its formative research stages.Though there is no plan to issue a digital currency, Mr. DeSantis on March 20 proposed state legislation to “protect Floridians from the Biden administration’s weaponization of the financial sector through a central bank digital currency.”He then warned during an April 1 speech, with no factual basis, that Democrats wanted to use a digital currency to “impose an E.S.G. agenda,” referring to environmental and social goals like curbing consumption of fossil fuels or tightening gun control.Mr. DeSantis “is heading off any attempt to control people’s behavior through centralized digital currency,” his press secretary, Bryan Griffin, said in response to a request for comment.Mr. DeSantis’s claims echo those on right-wing social media, and they are in line with the interests of important Republican donors: Many banks and cryptocurrency firms are adamantly opposed to the idea of a central bank digital currency, worried that it would take away business.Florida, in particular, has been friendly to the digital currency industry, with lawmakers passing favorable legislation.And people with stakes in cryptocurrency are among Mr. DeSantis’s top political donors. Kenneth Griffin, the billionaire hedge fund executive and crypto skeptic turned investor, gave $5 million to a political action committee that supported Mr. DeSantis’s 2022 re-election. Paul Tudor Jones, a billionaire investor who had significant shares in the now-bankrupt crypto trading platform FTX, contributed $850,000 to the group, according to campaign finance filings.Nor is it just Mr. DeSantis who is expressing opposition to the idea of a central bank digital currency: Prominent Republicans like Senator Ted Cruz of Texas and Representative Marjorie Taylor Greene of Georgia have joined in.Mr. Cruz and Representative Tom Emmer of Minnesota, the Republican whip, have introduced legislation to block the Fed from creating such a currency. Gov. Kristi Noem of South Dakota, another potential Republican presidential contender in 2024, recently vetoed a state bill that she claimed would have opened the door for a C.B.D.C.Some political figures are also incorrectly conflating a possible central bank digital currency with the central bank’s FedNow initiative, a separate effort to modernize America’s payment system to make transactions quicker and more efficient. A Fed spokesperson underlined that FedNow and the research into a possible digital currency were entirely different.Robert F. Kennedy Jr., a prominent figure in the anti-vaccine movement who recently announced his intention to run for president as a Democrat in 2024, wrongly conflated FedNow and the digital currency, claiming that it would “grease the slippery slope to financial slavery and political tyranny.”Tulsi Gabbard, a former Democratic presidential candidate and representative from Hawaii who is now independent, echoed warnings that a digital currency would undermine freedom, incorrectly stating that the government “has just begun implementing” such a currency.Incorrect statements about FedNow and digital currency have proliferated on social media, spread by influential political figures as well as conspiracy theorists.The Fed has tried to push back on the swirling misinformation.“The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash,” the central bank posted on Twitter on Friday. Its six-tweet F.A.Q. made no mention of politics, but nevertheless read like a rare public rebuke from an institution that diligently avoids wading into political commentary.“The Federal Reserve has made no decision on issuing a central bank digital currency (CBDC) & would not do so without clear support from Congress and executive branch, ideally in the form of a specific authorizing law,” the Fed said — in a tweet that Mr. DeSantis quoted.“It is not merely ‘ideal’ that major changes in policy receive specific authorization from Congress,” Mr. DeSantis said in a reply.By Tuesday afternoon, the Fed had updated its F.A.Q. online to be even more explicit: The central bank “would only proceed with the issuance of a CBDC with an authorizing law.” More

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      Never Mind About Ron DeSantis

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      Bret Stephens: Hi, Gail. I guess we have to talk about Donald Trump’s potential indictment and arrest, right? But before we go there: You know how I told you that I’d vote for Ron DeSantis over Joe Biden?Well, never mind.Gail Collins: Bret! You’re gonna vote for our big-spending president? Student-loan forgiver? Tax-the-richer?Bret: I’m still holding out faint hope that Nikki Haley or Tim Scott or my friend Vivek Ramaswamy or some other sound and sane Republican long shot somehow gets the nomination.Gail: Happy to gear up for that fight.Bret: But for DeSantis to call Russia’s invasion of Ukraine a “territorial dispute” in which the United States does not have a “vital interest” tells me that he’s totally unfit to be president. He’s pandering to the Tucker Carlson crowd.Gail: The Terrible Tuckerites …Bret: He is parroting Kremlin propaganda. He’s undermining NATO. He’s endangering America by emboldening other dictators with “territorial disputes,” starting with China’s Xi Jinping. He’s betraying the heroism and sacrifice of the Ukrainian people. He’s turning himself into a kind of Diet Pepsi to Trump’s Diet Coke. He’s showing he’s just another George Costanza Republican, whose idea of taking a foreign-policy stand is to “do the opposite” of whatever the Democrats do.Gail: Wow, can’t believe I’ve found someone who thinks less of DeSantis than I do.Bret: So, about Donald: to indict and arrest or not to indict and arrest? That’s the question. Where do you come down?Gail: No real doubts on the guilt front, and I’m pretty confident we’ll eventually see an indictment. The question is — what then? I’m hoping for a procedure in which he has to appear in public to answer the charges but doesn’t get treated in any way that’ll cause any not-totally-crazy supporters to gather for a riot.Bret: True, though why do I get the sense that Trump is practically jumping for joy? I mean, the first indictment of a former American president is going to be over what is typically a misdemeanor? I yield to nobody in my disgust with the guy, but so far, this sounds like prosecutorial abuse and political malpractice. Democrats will live to regret it.But to go from the horrifying to the truly horrifying: How goes your banking crisis?Gail: Bret, would definitely appreciate this not being “my” banking crisis.Bret: Give the crisis about six months. Or six weeks. Or maybe six days. It’ll be all of ours. Suggest you buy inflation-proof assets, like a rare instrument or 50-year-old scotch.Gail: Or some great old wine! Although in my house it’d never outlast the bank bust.As to a response, I’m in Bidenesque territory — the government does what it has to do to stabilize the situation, including covering the deposits in delinquent institutions like Silicon Valley Bank. But the only people who get rescued are the depositors.Bret: The big mistake of the administration was to bail out all the depositors, including a lot of very rich people who ought to have known better, instead of sticking to the F.D.I.C. limit of $250,000. Now the Feds have bailed out a bunch of rich, foolish and undeserving Silicon Valley dipsticks while creating an implicit, and systemically dangerous, guarantee for all depositors at all banks.Gail: I don’t love the idea of helping out $250,000-plus depositors, even over the short term, but this is not a good moment to destabilize the whole economy.Over the long term, however, those banks, their managers and big stockholders are going to have to be held accountable. Also Congress, which watered down regulations on midsize banks a few years back.Bret: Hard to tell whether the real issue was inadequate regulation, a badly run bank or — my guess — far deeper problems in the economy. Turns out Silicon Valley Bank didn’t even have a full-time chief risk officer for much of last year.Gail: You will notice I haven’t mentioned the Federal Reserve. Saving that for you …Bret: The Fed now has two bad problems, both of them largely of its own making. The first is inflation, which remains stubbornly high and was brought on in part because interest rates were too low for way too long. The second is an economy, particularly the banking sector, that seems to be seriously ill prepared for an era of higher rates. A classic Scylla and Charybdis situation, through which Jay Powell is somehow supposed to steer us. My advice to Powell — other than to tie himself to the mast — is to continue to raise rates, even if it means recession, and call for fiscal relief in the form of tax breaks for businesses ….Gail: Stopstopstop. Bret, Congress has to get a budget passed somehow, and the Republican plan is so nutty that even some Republicans don’t buy it. You’re suggesting that we cut taxes for businesses that are already making handsome profits.Bret: Businesses may be looking forward to a steep recession and much steeper borrowing costs. It’s a recipe for collapsing revenues and mass layoffs for businesses large and small. Better for the government to lighten the load for employers, even if it means piling on additional federal debt. In fact, it could be a good way to solve the debt-ceiling question.Gail: The people who are demanding this kind of bonanza for the rich are the same ones who are violently opposed to giving the deeply underfunded I.R.S. any new money. What could be worse than efficiently monitoring tax compliance?Bret: We’re both in favor of giving the I.R.S. the funding it needs to answer taxpayer phone calls. But if the economy is about to fall off a cliff, I don’t think the answer is to make sure the taxman is at the bottom of it, picking the pockets of the dead and wounded. Gail, this topic is … getting me down. You wrote a column last week saying that Kamala Harris is definitely staying on Joe Biden’s ticket. That gets me down, too, but please explain further.Gail: Well, we both agreed for quite a while that if Biden ran again, he should pick a different veep.Bret: Like Gina Raimondo, the commerce secretary, or Michelle Lujan Grisham, the governor of New Mexico, or Danielle Allen, the brilliant Harvard political philosopher who has the added virtue of not being a politician.Gail: Yes, but then I gave it a long, hard thought — trying to imagine how that would work out. Tossing Harris off the ticket would be hugely disrespectful. There’s nothing she’s done that deserves that kind of insult.Bret: Did Nelson Rockefeller deserve it? Politics is politics.Gail: There are lots of terrific women in high places — governors and senators — who’d be terrific as vice president. But we aren’t starting from scratch. Harris has made some errors in her current job, but she’s done some good things, too. Just don’t think this rises to the occasion of Throw Her Out.Bret: To me, she’s Dan Quayle-level ridiculous — and George H.W. Bush would have been wise to toss Quayle from the ticket in 1992. You can bet that whoever the Republican nominee is next year will hammer away at Biden’s age and her shortcomings — like saying we have a secure border with Mexico or confusing North and South Korea — to very good political effect.Gail: Let’s go back to the president you … may be willing to vote to re-elect. He’s fighting hard to reduce federal student debt payments for low- and moderate-income people. I remember your not loving this idea in the past. Any change of heart?Bret: Nope. The problem we have with the banks stems from what economists call moral hazard — basically, encouraging risky behavior. Pardoning student debt is another form of moral hazard: It encourages people to take out loans unwisely in the expectation that they might one day be forgiven. If we are forgiving college loans now, why not forgive mortgages next? Also, it’s an unconstitutional usurpation of Congress’s legislative prerogatives. Democrats objected when Trump steered Defense Department money to building the border wall without congressional authorization; Democrats shouldn’t further establish a bad precedent.Assuming you see it otherwise.Gail: Yeah. A lot of these people have been making loan payments for decades without making much progress in erasing the actual debt. None of them are rich, and a lot are struggling endlessly.I can understand the resentment from folks who made a great effort and did pay off their loans. But we’re talking, in general, about people who were given the impression that borrowing large amounts of money to get a no-frills degree was a great investment that always paid off.Bret: If the government is expected to backstop everybody’s bad or dumb decisions, the country would bankrupt itself in a week. Part of living in a free society is being responsible for your choices, including your mistakes.Gail: I’m looking at this as a one-time shot that’s worth taking. But I have to admit I don’t love the idea of Biden acting without congressional authorization. Even though he wouldn’t have gotten it.Sigh.Bret: Never mind Congress — I can’t see this getting past the Supreme Court, so what we’re really talking about is another phony campaign promise.Gail: Well, I guess it’s a case of what ought to be versus what can be. But I still think there should be loan forgiveness for those who’ve spent half their lives trying to pay off a debt they were generally too young and uninformed to realize they should avoid.Really, Bret, who wants to perpetually punish people who fell for the siren call of “borrow money for your education”?Bret: In the meantime, Gail, we have Wyoming outlawing abortion pills. We’ll need to devote more time to the subject soon, but all I’ll say for now is: When the world goes to hell, it has a way of getting there fast.Gail: I’ve been thinking about Wyoming so much, Bret. Let’s go at it in depth next week. But if you hear that I was caught growling in public, you’ll know why.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More

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      Biden Makes His Business Case in the State of the Union Address

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      The president took credit for strong job growth and his legislative agenda that’s boosted investment in infrastructure and clean energy projects.“I will make no apologies.”Pool photo by Jacquelyn Martin-Pool/Getty Images.Biden picks his battles President Biden delivered a State of the Union address to Congress on Tuesday night that was filled with dramatic moments, meant in part to jump start his 2024 re-election campaign.He also used the speech to press his economic priorities, from bolstering American manufacturing to extending his climate efforts. How far he advanced his causes, however, remains to be seen.Mr. Biden defended his record on the economy. He took credit for falling inflation and strong job growth, and listed promised benefits from his sweeping legislative agenda, including infrastructure, clean energy (even if he did acknowledge, “we’re still going to need oil and gas for a while”) and manufacturing laws that will pour trillions into the economy.He also urged Congress to back initiatives including raising a billionaires tax on the wealthy; expanding a measure in the Inflation Reduction Act that caps the cost of insulin at $35 a month; renewing the expanded child tax credit; and expanding Medicaid and affordable child care.He baited Republicans over social welfare programs. Mr. Biden accused some Republicans of threatening Social Security and Medicare, implying they wanted cuts in exchange for a deal to raise the debt ceiling. (That claim requires a bit of context.) Several lawmakers shouted in response; one, Representative Marjorie Taylor Greene of Georgia, yelled “Liar!”Mr. Biden responded that he had somehow gotten unanimity on the issue. “We all apparently agree, Social Security and Medicare is off the books now, right?” he said, leading a bipartisan round of applause for seniors.He kept up pressure on ripe political targets. Though Mr. Biden didn’t directly address the Chinese spy balloon incident, he pledged to make America more competitive and less reliant on China. “I will make no apologies that we are investing to make America strong,” he said. “Investing in American innovation — in industries that will define the future, and that China’s government is intent on dominating.”Mr. Biden also called out tech companies, demanding stricter limits on their collection of personal data, and oil giants, which he accused of raking in record profits from high energy prices instead of using their huge coffers to increase domestic production.How much cooperation Mr. Biden will get from Republicans and business is unclear. In Republicans’ rebuttal, Gov. Sarah Huckabee Sanders of Arkansas accused him of perpetrating a culture war. Corporate America was more circumspect: Suzanne Clark, the head of the U.S. Chamber of Commerce, reiterated her group’s support for the infrastructure law, but urged Biden to focus on striking more trade agreements and pulling back from what she said was overregulation.HERE’S WHAT’S HAPPENING The U.S. trade deficit balloons to $948 billion. The export-import gap jumped 12 percent in 2022, to a record, as Americans continued to spend more on imported goods than travel and entertainment. Trade data also showed growing deficits in goods with the likes of Mexico and South Korea, as manufacturers seek bases outside China.Microsoft announces A.I.-powered consumer internet tools. The tech giant promised versions of its Bing search engine and Edge browser that incorporate chatbots, drawing on a partnership with the ChatGPT creator OpenAI. Microsoft’s ambitions may be bigger: It’s reportedly planning to create software to let companies make their own ChatGPT-powered chatbots.Zoom plans to lay off 15 percent of its staff. The videoconferencing company acknowledged it had hired too many people during its pandemic boom, and needed to retrench as growth has slowed. Its C.E.O., Eric Yuan, said he plans to cut his salary for the coming fiscal year by roughly 98 percent and forgo a bonus.A former Coinbase employee pleads guilty to insider trading. Ishan Wahi, who was a product manager at the crypto exchange, had been accused of tipping his brother and a friend about tokens it planned to list, bringing about $1.5 million in illegal profit. He’s the first crypto insider to admit insider trading.Chobani’s founder urges U.S. companies to fund recovery efforts for the earthquake in Turkey and Syria. Hamdi Ulukaya, a Turkish immigrant, has partnered with the Turkish Philanthropy Funds to aid in recovery from the quake, which has a death toll above 11,000. He told DealBook that he has personally donated $2 million to the cause.Jay Powell sees a “bumpy” path ahead America’s red-hot labor market suggests that the world’s biggest economy may yet avoid recession. But this same dynamic has also thrust the Fed into a policy conundrum, with pressure for higher interest rates to tamp down inflation.In a question-and-answer session at the Economic Club of Washington on Tuesday, the Fed’s chair, Jay Powell, said he could see “the very early stages of disinflation,” but added that the easing in prices was likely to follow a “bumpy” path, particularly with hiring and wage growth proving strong.January’s jobs data surpassed the Fed’s forecasts. Mr. Powell said last Friday’s knockout nonfarm payroll report, which announced that employers added 517,000 new jobs last month, was “certainly strong — stronger than anyone I know expected.”Other data offered more encouraging signs for the U.S. economy. The Atlanta Fed’s GDPNow tracker forecasts that the U.S. will grow by 2.1 percent in the first quarter; it was predicting 0.7 percent a week ago. And even bearish economists are dialing down their gloomy expectations: “A potential recession in 2023 will likely be short and shallow,” Jeffrey Roach, the chief economist for LPL Financial, wrote to investors on Tuesday, while Goldman Sachs economists this week lowered their estimate of the likelihood of a U.S. recession to 25 percent.Investors were relieved that Mr. Powell gave no hint of a sudden shift in the Fed’s strategy. He reiterated that the central bank planned to keep raising borrowing costs to rein in consumer spending. That was enough to reassure investors that no big policy changes were coming soon: The S&P 500 rallied after his comments, snapping a two-day losing streak.A hedge fund catches meme fever Hudson Bay Capital Management has emerged as the mystery backer of Bed Bath & Beyond’s bold plan to cash in on its meme-stock cachet to raise $1 billion in emergency funds and avert bankruptcy.The hedge fund’s involvement in the deal highlights the meme-stock frenzy’s pull on big institutions. Shares in the struggling retailer, which has closed 400 stores in the past year as revenues slide, are up nearly 86 percent in the past month in extremely volatile trading that’s been largely influenced by day-traders betting on its survival. But the stock nearly halved on Tuesday, after the company announced it would sell a flood of new shares, which will dilute existing shareholders.Hudson Bay has underwritten the initial $225 million worth of shares that Bed Bath & Beyond is selling. It plans to underwrite another $800 million over time, if certain unspecified “conditions are met.” Hudson Bay also receives warrants to buy further stock at an advantageous price, which could prove lucrative if the retailer were to turn its business around.The deal with Hudson Bay came together within the past several weeks, two people familiar with the negotiations told DealBook. Late last month, JPMorgan Chase, which gave Bed Bath & Beyond a lifeline last summer by expanding its credit line, froze the retailer’s credit accounts after deeming the company in breach of the terms of its debt. As Bed Bath & Beyond raced to find cash to pay its debts, it had also been preparing for a bankruptcy — and possible liquidation — if the needed funds didn’t arrive.Whether this only buys Bed Bath & Beyond a temporary reprieve remains to be seen. “The fundamental story for Bed Bath & Beyond is so broken at this point,” said David Silverman, a retail analyst at Fitch Ratings. “I don’t know that a short-term cash infusion that could buy them a few months, a couple of quarters, is going to change their fate.” The Wedbush Securities analyst Seth Basham seconded that opinion, cutting the stock price target to zero.“U.S. hog farmers look at the pictures of those farms in China, and they just scratch their heads and say, ‘We would never dare do that.’” — Brett Stuart, founder of the research firm Global AgriTrends, is worried about disease risks from China’s high-density pig farms, which in some cases pack the animals into tower blocks.Adam Neumann opens up about his next act Since leaving WeWork, Adam Neumann has (largely) kept quiet about his future plans, including Flow, a venture that Andreessen Horowitz invested $350 million in last year. But he is finally revealing more about the start-up, via a talk he gave to an Andreessen Horowitz-organized conference in November.The main — if still vague — takeaway is that Flow owns and operates apartment buildings that aim to persuade tenants to stay longer by making them “feel” as if they’re owners rather than renters. (How is left unsaid.) Mr. Neumann used plumbing to illustrate the business advantages of this approach, according to Bloomberg:An important element of the business proposition is that renters who stay longer are more profitable, Neumann said. His theory is that people who feel a sense of ownership will stick around.The plunger factor would be an added benefit for Flow. “If you’re in an apartment building and you’re a renter and your toilet gets clogged, you call the super,” he said. “If you’re in your own apartment, and you bought it and you own it and your toilet gets clogged, you take the plunger.” That’s the difference, he said, “when feeling like you own something.”THE SPEED READ DealsApollo is reportedly in talks to buy a stake in CS First Boston, the investment bank that will be spun out of Credit Suisse. (WSJ)Carlyle is said to be in negotiations to buy Cotiviti, a health care tech company, from Veritas Capital for nearly $15 billion. (Bloomberg)Oaktree Capital and other hedge funds have snapped up Adani Group bonds in recent days, restoring investor confidence in the beleaguered Indian conglomerate. (Bloomberg)PolicyMarty Walsh, the U.S. labor secretary, reportedly will step down to lead the N.H.L. players’ union. (Daily Faceoff)Senator Josh Hawley, Republican of Missouri, said he wants to make 16 the minimum age to be allowed on social media in the U.S. (NBC News)Russia’s government is said to be pressuring the central bank to loosen fiscal policy as it enters the second year of its invasion of Ukraine. (Bloomberg)Best of the restAmerican start-ups laid off over 3,000 workers last month, up 1,700 percent from a year ago. Relatedly, Washington now has more tech vacancies than Silicon Valley. (Insider, WSJ)“The Secret Saudi Plan to Buy the World Cup.” (Politico)Voice actors say they’re increasingly being asked to sign away the rights to their voices — so they can be duplicated by A.I. (Vice)How Nestlé’s bet on a breakthrough treatment for peanut allergies went south. (Bloomberg Businessweek)LeBron James now owns the N.B.A.’s scoring record. (NYT)We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. More

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      A Recession Would Hurt Democrats. Some Warn It’d Also Hurt Democracy.

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      By trying to tame inflation, some commentators say, the Federal Reserve could bring about a recession — just as an unrepentant Donald Trump appears to be eyeing another White House bid.Jerome Powell, the chairman of the Federal Reserve, made the understatement of the year on Wednesday when he noted offhandedly to reporters, “Clearly, people do not like inflation.”And how.According to Fox News’s latest national poll, 41 percent of registered voters said that “inflation and higher prices” represented the most important issue influencing their ballot decision in November. Just 12 percent of voters called guns their top priority, the second-place issue. Seventy-one percent disapproved of the job President Biden is doing on inflation.This is not exactly a vote of confidence in the federal government. In the past, this level of public dissatisfaction has typically led to major political upheaval.Inflation ran at a rate of 8.6 percent in May, the fastest annual pace in four decades. Voters do not seem to be buying the White House’s argument, backed up by the Fed and places like the World Bank, that global factors beyond Biden’s control like the pandemic, supply-chain crises and the war in Ukraine are driving the increase in prices.Nor do they seem to be giving the administration much credit for an unemployment rate that is down to 3.6 percent, just a tick above its prepandemic level.The Fed might be Biden’s best hope. After the Federal Open Market Committee announced on Wednesday that it would raise short-term interest rates by three-quarters of a percentage point, Powell said the Fed’s goal was to bring inflation closer to its 2 percent target while keeping the labor market “strong.”He hastened to add: “We’re not trying to induce a recession now. Let’s be clear about that.”‘A democracy-wrecking election’Yet some commentators, notably David Frum of The Atlantic, have begun to fret that in trying to tame inflation, the Fed will do exactly that — start a recession, just in time to doom Biden or whomever Democrats nominate in his stead in 2024.Understand Inflation and How It Impacts YouInflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Greedflation: Some experts contend that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.For Investors: At last, interest rates for money market funds have started to rise. But inflation means that in real terms, you’re still losing money.Frum noted the historically tight link between economic growth and a president’s chances of re-election. Citing the possibility that an unrepentant Donald Trump will run again, he argued that a downturn this year or next could result in “a democracy-wrecking election the next year.”He concluded: “So the Federal Reserve has a more than usual obligation this week to measure its policy appropriately. A miscalculation in monetary policy in 2022 could reverberate through long ages of American history ahead.”Others have criticized Biden’s decision last fall to nominate Powell for a second term, leaving the president handcuffed in blaming the Fed chair for the parlous state of the economy. Powell was, after all, Trump’s pick for Fed chair — and Biden, the thinking goes, could have thrown him overboard and started afresh.That would have been a very Trump-like move. Powell resisted months of intense pressure from the 45th president to lower interest rates, including comments describing the low-key Fed chairman as an “enemy” of the United States. Central bankers prize their distance from politics, mindful that their credibility with financial institutions around the world is crucial to their effectiveness.So in renominating Powell, Biden made sure to emphasize his respect for his institutional prerogatives. “My plan is to address inflation,” the president said. “It starts with a simple proposition: Respect the Fed and respect the Fed’s independence.”Jerome Powell, the chairman of the Federal Reserve, with President Biden last month. Some Democrats had urged Biden to choose a Fed chair of his own.Doug Mills/The New York TimesThe Fed’s relationship with politicsLet’s set aside the fraught question of whether Trump’s re-election could bring about the end of American democracy. Does the Fed, in fact, have an “obligation” to consider how its actions might affect the U.S. political system?On a simple reading of the law, not really. The Federal Reserve Act gives the Fed the authority to regulate the nation’s money supply, to foster the “long-run potential” of the U.S. economy and to promote the goals of “maximum employment, stable prices and moderate long-term interest rates.”Frederic Mishkin, a former member of the Fed’s board of governors, no doubt spoke for many in the finance world when he wrote in an email, “I most strongly disagree with the view that the Federal Reserve should adjust its policy to favor or harm any politician.”He added, “The Fed should be as apolitical as possible, and its policy focus should be on stabilizing both inflation and output fluctuations, as is mandated by congressional legislation.”But it’s hard to divorce the Fed from its historical roots, founded as it was in an era of great political turmoil driven by frequent financial panics.The Fed was successfully established in 1913 because President Woodrow Wilson won the assent of William Jennings Bryan, the most influential populist leader of the time, by guaranteeing that government officials appointed by the president, not private sector bankers, would run the board.Inflation F.A.Q.Card 1 of 5What is inflation? 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      If You Must Point Fingers on Inflation, Here’s Where to Point Them

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      As the midterm elections draw nearer, a central conservative narrative is coming into sharp focus: President Joe Biden and the Democratic-controlled Congress have a made a mess of the American economy. Republicans see pure political gold in this year’s slow-motion stock market crash, which seems to be accelerating at the perfect time for a party seeking to regain control of Congress in the fall.The National Republican Congressional Committee in a tweet last month quipped that the Democratic House agenda includes a “tanking stock market.” Conservatives have been highlighting a video clip from 2020 when then-president Donald Trump warned about a Joe Biden presidency: “If he’s elected, the stock market will crash.” Right wing pundit Sean Hannity’s blog featured the clip under the headline: “TRUMP WAS RIGHT.”But the narrative pinning blame for the economy’s woes squarely on Democrats’ shoulders elides the true culprit: the Federal Reserve. The financial earthquakes of 2022 trace their origin to underground pressures the Fed has been steadily creating for a over a decade.It started back in 2010, when the Fed embarked on the unprecedented and experimental path of using its power to create money as a primary engine of American economic growth. To put it simply, the Fed created years of super-easy money, with short-term interest rates held near zero while it pumped trillions of dollars into the banking system. One way to understand the scale of these programs is to measure the size of the Fed’s balance sheet. The balance sheet was about $900 billion in mid-2008, before the financial market crash. It rose to $4.5 trillion in 2015 and is just short of $9 trillion today.All of this easy money had a distinct impact on our financial system — it incentivized investors to push their money into ever riskier bets. Wall Street-types coined a term for this effect: “search for yield.” What that means is the Fed pushed a lot of money into a system that was searching for assets to buy that might, in return, provide a decent profit, or yield. So money poured into relatively risky assets like technology stocks, corporate junk debt, commercial real estate bonds, and even cryptocurrencies and nonfungible tokens, known as NFTs. This drove the prices of those risky assets higher, drawing in yet more investment.The Fed has steadily inflated stock prices over the last decade by keeping interest rates extremely low and buying up bonds — through a program called quantitative easing — which has the effect of pushing new cash into asset markets and driving up prices. The Fed then supercharged those stock prices after the pandemic meltdown of 2020 by pumping trillions into the banking system. It was the Fed that primarily dropped the ball on addressing inflation in 2021, missing the opportunity to act quickly and effectively as the Fed chairman, Jerome Powell, reassured the public that inflation was likely to be merely transitory even as it gained steam. And it’s the Fed that is playing a frantic game of financial catch-up, hiking rates quickly and precipitating a wrenching market correction.So, now the bill is coming due. Unexpectedly high inflation — running at the hottest levels in four decades — is forcing the Fed to do what it has avoided doing for years: tighten the money supply quickly and forcefully. Last month, the Fed raised short-term rates by half-a-percentage point, the single largest rate hike since 2000. The aggressiveness of the move signaled that the Fed could take similarly dramatic measures again this year.A sobering realization is now unfolding on Wall Street. The decade of super-easy money is likely over. Because of inflation’s impact, the Fed likely won’t be able to turn on the money spigots at will if asset prices collapse. This is the driving force behind falling stock prices, and why the end of the collapse is probably not yet in sight. The reality of a higher-interest-rate world is working its way through the corridors of Wall Street and will likely topple more fragile structures before it’s all over.After the stock and bond markets adjust downward, for example, investors must evaluate the true value of other fragile towers of risky assets, like corporate junk debt. The enormous market for corporate debt began to collapse in 2020, but the Fed stopped the carnage by directly bailing out junk debt for the first time. This didn’t just save the corporate debt market, but added fuel to it, helping since 2021 to inflate bond prices. Now those bonds will have to be re-priced in light of higher interest rates, and history indicates that their prices will not go up.And while the Fed is a prime driver of this year’s volatility, the central bank continues to evade public accountability for it.Just last month, for instance, the Senate confirmed Mr. Powell to serve another four-year term as Fed chairman. The vote — more than four to one in favor — reflects the amazingly high level of bipartisan support that Mr. Powell enjoys. The president, at a White House meeting in May, presented Mr. Powell as an ally in the fight against inflation rather than the culprit for much of this year’s financial market volatility. “My plan is to address inflation. It starts with a simple proposition: Respect the Fed and respect the Fed’s independence,” the president said.This leaves the field open for the Republican Party to pin the blame for Wall Street’s woes on the Democratic Party’s inaction. As Jim Jordan, the Republican congressman from Ohio, phrased it on Twitter recently, “Your 401k misses President Trump.” This almost certainly presages a Republican line of attack over the summer and fall. It won’t matter that this rhetoric is the opposite of Mr. Trump’s back in 2018 and 2019, when the Fed was tightening and causing markets to teeter. Back then, Mr. Trump attacked Mr. Powell on Twitter and pressured the Fed chairman to cut interest rates even though the economy was growing. (The Fed complied in the summer of 2019.) But things are different now. Mr. Biden is in office, and the Fed’s tightening paves a clear pathway for the Republican Party to claim majorities in the House and Senate.Republicans have also honed in on Mr. Biden’s $1.9 trillion American Rescue Plan, meant to mitigate the impact of the Covid-19 pandemic, as a cause for runaway inflation. Treasury Secretary Janet Yellen rejected that, noting in testimony before members of Congress: “We’re seeing high inflation in almost all of the developed countries around the world. And they have very different fiscal policies. So it can’t be the case that the bulk of the inflation that we’re experiencing reflects the impact” of the American Rescue Plan.Democrats would be wise to point to the source of the problem: a decade of easy money policies at the Fed, not from anything done at the White House or in Congress over the past year and a half.The real tragedy is that this fall’s election might reinforce the very dynamics that created the problem in the first place. During the 2010s, Congress fell into a state of dysfunction and paralysis at the very moment when its economic policymaking power was needed most. It should be viewed as no coincidence that the Fed announced that it would intensify its experiments in quantitative easing on Nov. 3, 2010, the day after members of the Tea Party movement were swept into power in the House. The Fed was seen as the only federal agency equipped to forcefully drive economic growth as Congress relegated itself to the sidelines.With prices for gas, food and other goods still on the rise and the stock market in a state of flux, there may still be considerable pain ahead for consumers. But Americans shouldn’t fall for simplistic rhetoric that blames this all on Mr. Biden. More than a decade of monetary policy brought us to this moment, not 17 months of Democratic control in Washington. Voters should be clear-eyed about the cause of this economic chaos, and vote for the party they think can best lead us out of it.Christopher Leonard (@CLeonardNews) is the author, most recently, of “The Lords of Easy Money: How the Federal Reserve Broke the American Economy” and executive director of the Watchdog Writers Group at the Missouri School of Journalism.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More