Having contradictory mandates is nothing new, nor is it intrinsically a problem. What it means objectively is that the Federal Reserve, like so many other entities, is obligated to balance a myriad of concerns in formulating policy.
Unfortunately, the Fed rarely addresses the balancing required, and almost reflexively conflates asset pric…
Having contradictory mandates is nothing new, nor is it intrinsically a problem. What it means objectively is that the Federal Reserve, like so many other entities, is obligated to balance a myriad of concerns in formulating policy.
Unfortunately, the Fed rarely addresses the balancing required, and almost reflexively conflates asset prices and consumer prices--even though the two are vastly different and warrant different economic consideration: asset price inflation is good where consumer price inflation is bad, and asset price deflation is bad where consumer price deflation is good.
Much of the interest rate manipulations that Ben Bernanke and his successors have done were directly (and explicitly) targeted as sustaining ASSET prices. In fact, if you index the S&P 500, the DJIA, and the NASDAQ alongside the M1 money supply, beginning in 2008 the stock market indices strongly correlate to M1 money supply growth, up to 2020 when everything came unglued.
As for the Fed calling out the Congress on matters such as the IRA. Notionally, fiscal policy is not the Fed's brief, and there would be a lot of hue and cry over the Fed trying to color outside the lines, so to speak. Given that the Fed has demonstrated little understanding of actual inflation drivers, I'm not entirely comfortable with them weighing in on the topic--I've had my fill of overeducated but fundamentally ignorant "experts" trying to micromanage everything.
The better approach would be to return Congressional action (and, by extension, the Federal Government), to the narrow confines of the enumerated powers, and let the States handle the rest of the governance job as the Constitution actually mandates.
But there I go, using common sense again! (I really need to do something about that, it gets me into all kinds of trouble!)
Also, FWIW, the better approach would be to let the Treasury control the money supply, and divorce the Federal government from having to borrow, at interest, every dollar it spends.
As Dr. Ron Paul has maintained for decades - End the Fed.
Giving Treasury control of the money supply would lead directly to a CBDC model for the US.
No, thank you.
At that point we'd be better off with a form of cryptocurrency as the basis for currency, but one that was not subject to interventions and debasement by the Treasury.
Ideally, a cryptocurrency backstopped by gold and silver would obviate the entire convoluted process of "managing" the money supply.
Failing that, if Treasury is going to be issuing currency they need to have a vetted supply of gold and silver on hand to support the currency.
Ending the Fed is a good idea.
Giving Treasury the currency creation role of the Fed, not so much.
Well, FWIW, Lincoln did exactly that when funding the Civil War, issuing "green backs" via the Treasury, backed only by the good faith of the Federal government. He was forced into this position because the northern bankers would only lend money at exorbitant interest rates.
I'm no fan of CBDCs, either. And, FWIW, backing currency with gold and/or silver only works if there is a fairly free market in precious metals, something we have not had for a very long time.
Having contradictory mandates is nothing new, nor is it intrinsically a problem. What it means objectively is that the Federal Reserve, like so many other entities, is obligated to balance a myriad of concerns in formulating policy.
Unfortunately, the Fed rarely addresses the balancing required, and almost reflexively conflates asset prices and consumer prices--even though the two are vastly different and warrant different economic consideration: asset price inflation is good where consumer price inflation is bad, and asset price deflation is bad where consumer price deflation is good.
Much of the interest rate manipulations that Ben Bernanke and his successors have done were directly (and explicitly) targeted as sustaining ASSET prices. In fact, if you index the S&P 500, the DJIA, and the NASDAQ alongside the M1 money supply, beginning in 2008 the stock market indices strongly correlate to M1 money supply growth, up to 2020 when everything came unglued.
https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/8f1b6e9e-8177-480c-9476-7b995cdfa695_640x255.png
As for the Fed calling out the Congress on matters such as the IRA. Notionally, fiscal policy is not the Fed's brief, and there would be a lot of hue and cry over the Fed trying to color outside the lines, so to speak. Given that the Fed has demonstrated little understanding of actual inflation drivers, I'm not entirely comfortable with them weighing in on the topic--I've had my fill of overeducated but fundamentally ignorant "experts" trying to micromanage everything.
The better approach would be to return Congressional action (and, by extension, the Federal Government), to the narrow confines of the enumerated powers, and let the States handle the rest of the governance job as the Constitution actually mandates.
But there I go, using common sense again! (I really need to do something about that, it gets me into all kinds of trouble!)
Also, FWIW, the better approach would be to let the Treasury control the money supply, and divorce the Federal government from having to borrow, at interest, every dollar it spends.
As Dr. Ron Paul has maintained for decades - End the Fed.
Giving Treasury control of the money supply would lead directly to a CBDC model for the US.
No, thank you.
At that point we'd be better off with a form of cryptocurrency as the basis for currency, but one that was not subject to interventions and debasement by the Treasury.
Ideally, a cryptocurrency backstopped by gold and silver would obviate the entire convoluted process of "managing" the money supply.
Failing that, if Treasury is going to be issuing currency they need to have a vetted supply of gold and silver on hand to support the currency.
Ending the Fed is a good idea.
Giving Treasury the currency creation role of the Fed, not so much.
Well, FWIW, Lincoln did exactly that when funding the Civil War, issuing "green backs" via the Treasury, backed only by the good faith of the Federal government. He was forced into this position because the northern bankers would only lend money at exorbitant interest rates.
I'm no fan of CBDCs, either. And, FWIW, backing currency with gold and/or silver only works if there is a fairly free market in precious metals, something we have not had for a very long time.