For those who adamantly follow the inner machinations of the Federal Reserve, you know that a few distinct brave members have not given Buzz Ben an imprimatur to continue printing money (quantitative easing QE), we’re beginning to witness the vocal rise of voting members who recognize the moral calamity brewing.
Here’s a fast review.
The upside of QE (infinity) has been a rise in asset prices. This helps a class of investors only, for a higher Dow Jones sustains the very purpose of govmint: revenue, in the form of artificially higher assets that permit our taxing authority (govmint) revenue.
The down side: Keynesian political economy is destroying the patient!
With the Fed having announced that it wants inflation while it tackles unemployment, we should know that neither is being achieved. Remember how Reagan killed the Phillips Curve? In fact a pious Muslim killed it (remember Ibn Khaldun?) Nevertheless, we’re arriving at a 1970’s style crisis, an intellectual crisis that was resolved by Reagan and Vockler in favor of Republican ideals.
Remember, the Fed is measuring long run inflation using PCE (personal consumption expenditure) and an average unemployment rate that is consistent with prices stability. Given the accuracy such metrics have, why has the Fed failed?
The answer is simple: the American family isn’t spending. Lack of policy induced growth is the cause.
How does this end?
A spent, intellectually exhausted Fed is how I envision it.
What do we need?
We need policy certainty from D.C. And we need a Fed who will demonstrate the moral clarity consistent with the ideal that underwrites the American Founding. We need to clarify the nature of the policy regime toward which the current transitional policy is leading.
Don’t hold your breadth.