Generations ago, Republicans abandoned their assigned role — which was rarely real — as the party of pain that raised taxes to pay for popular Democratic spending programs. Now, in an era of low interest rates — actually, or almost, negative — the assumption is that deficits do not matter as long as the interest rate for servicing the national debt remains lower than the rate of economic growth, so the ratio of debt to GDP declines. At long last, for humanity, or at least the American portion, the table has been set for a free lunch.
Powell has said he will apply a seigniorage tax as much as needed to keep rates low. Powell does not have that authority, that is unconstitutional for Powell to acquire the power to tax. It is way too late to do anything else.
Powell and Yellen know what this means, a New Fed contract. They both know that one or more House members will sue the Fed, or a group of fiat banks will sue the Fed. And this is a commonly known but commonly denied issue.
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