Now that 2020 has come to an end, and a new administration is inaugurated, many are
reminiscing about the most consequential people and events of this tumultuous past year. Yet perhaps the most influential person throughout the events of 2020 has gone thoroughly unappreciated. He’s not an elected official or a world leader, but he carries more influence over the global economy than nearly anyone else on the planet. I’m referring, of course, to the Chair of the United States Federal Reserve, Jerome “Jay” Powell. While many are not aware of Mr. Powell’s role as steward of the American economy, it’s because he’s done something that’s relatively unprecedented in economic policymaking—a good job. Jay’s unprecedented actions as Fed chair not only single-handedly saved the economy from a massive financial crisis but shaped the role of the Federal Reserve for decades to come. In early March of last year, the American economy was on the brink of financial collapse. The economic conditions initially looked similar to those in the Great Recession back in 2008. An unforeseen pandemic caused the stock market to crash and brought lending to a halt, causing the money supply to dry up. But Jay was ready for this challenge. He had spent years studying what exactly went wrong in 2008 and was determined not to make the same mistakes as his predecessors. Powell immediately called two emergency meetings of the Federal Reserve Board of Governors, cutting the Federal Funds Rate from 1.5 percent to near zero and providing liquidity to keep corporations able to borrow and banks able to lend. Now, financial markets have almost entirely recovered from the pandemic, mainly due to the Fed’s swift stabilizing actions. While it’s true that millions of Americans are still in need of support through fiscal stimulus, the Federal Reserve does not have the power to tax and spend money as the Federal Government does. Instead, Powell has moved to lower interest rates on US treasuries, allowing policymakers to expand government spending with limited fiscal consequences. Now, with the Democratic trifecta unveiling a $1.9 Trillion stimulus package of targeted financial relief, it is clear that Powell has fulfilled his Congressional mandate of promoting financial stability and maximum employment. Much of Powell’s success has been attributed to his nonpartisan and evidence-based policymaking, never caving to the political desires of Washington. Powell, a Republican, was nominated by President Trump in 2017 to succeed former Fed chair and current Treasury Secretary nominee Janet Yellen. Yet, Powell does not let his political affiliation influence his policymaking. Over the years, Powell endured sharp criticism from President Trump during the Fed’s gradual interest rate hikes. The President has called Powell “clueless,” “crazy,” and even an “enemy” on par with Chinese President Xi Jinping. We only had to wait a few months to see who was right—Powell’s decision to raise rates gave the American economy a cushion against a recession, providing a monetary boost to the economy when we needed it most.
Regardless of whether he is renominated for a second term later this year by President Joe Biden, Powell will go down in history as a strong-willed leader who took bold steps in a time of financial turmoil, influencing monetary policymaking for decades to come. So as we all watch our next President and a new generation of political leaders on this Inauguration Day, let’s all remember to thank the man whose quiet civil service too often goes unseen and unappreciated—Jerome Hayden Powell.