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exactly, during the Obama recession, markets would not bear prices increases, so sizes were shrunken & quality was reduced. now finally, retailers can raise prices. The Fed was politicized by liberal Keynesians in 1977 under the dual mandate law, which tasks the Fed with maintaining “maximum employment” first, inflation second....because it once was believed that inflation rate & unemployment rate always moved in opposite directions.....meaning that being tough on inflation would cost jobs & drive up the unemployment rate.
It’s silly when fake news wails about the “independence” of the Fed, which is operating under its own interpretation of that dual mandate law.....whereas the president is the chief law enforcement officer & thereby has a legal & Constitutional DUTY to have his own interpretation of the Fed’s dual mandate, being that he nominates the Fed chairman & its board of directors.
Alan Greenspan did harm to both the Reagan legacy, the George HW Bush presidency & the George W Bush presidency.
George H W Bush expected Greenspan to slash interest rates against his tax increase, because it was Greenspan who demanded the deficit be reduced to drive DOWN interest rates, & after Greenspan had hiked his funds rate to 9.75% to precipitate the 1990 recession with Savings & Loan crisis. The Fed has too much so-called “independence” because the markets have no idea what the Fed does or why it does it. Clinton raised taxes, then Greenspan raised rates on him to almost put us into another recession, which cost Clinton in the midterm elections. Bush was vocal about blaming Greenspan for his not getting re-elected.....& so fake news called Bush a “Nazi” for blaming the bad economy on Greenspan for causing a recession, then being slow to respond to it with rate cuts. You see, Greenspan was-—according to fake news——a “Jewish banker” & you just may NOT criticize a Jewish banker....even when he’s Fed chairman, playing with peoples’ lives & you are a politician/office holder who promised to make peoples’ lives better.
Clinton was fuming after he raised taxes to fix the deficit & was met with a rate increase by Greenspan. It was believed that “deficits crowd out private investment & cause inflation”—& Clinton campaigned, claiming the economy depended on the housing sector, which depends on interest rates which depend on budget outlooks of deficits or surpluses. (the is Eisenhower economics...but the fact is that high taxes & regulation also crowd out private investment & harm competition & innovation & productivity which effect prices).
In 2000, Greenspan raised his funds rate to 6.5% & caused the Nasdaq to crash by more than 50%, even though Greenspan himself claimed that a budget surplus should drive DOWN interest rates. Greenspan said that he was worried that the economy was too good & was worried that the national debt was being paid off “too soon”. Where was that any of his business. Where in the dual mandate does it say that the Fed should worry about the national debt being paid off “too fast”? Clinton should have screamed over the news for Greenspan to OBEY THE LAW instead of risking recession....allowing the economy to grow as fast as it wanted to pay off the national debt as soon as possible. and if Greenspan was worried about the national debt being paid of “too soon” as he admits.....then he could have demanded tax cuts or spending on infrastructure.
Between 2004 and 2006, the Fed raised its funds rate over 400% in two short years. Ben Bernanke claimed he was trying to “slow the economy through the housing sector to keep WAGES from rising....” WAGES, not prices. He was worried about the free market, where low unemployment rates meant that demand for labor was exceeding supply of labor,,,,but because of immigration, we always are increasing the supply of labor....so please explain why the Fed gets to rig the free market for buyers of labor over sellers of labor and call that “independence”.
Thank God for Trump. He has every reason to enforce the law by having his Fed chairman resign.
I’ve heard business shows on TV where billionaires who make money in any and every economy demand the Fed raise rates high and risk recession because “we need creative destruction” as if creative destruction cannot happen during booms, but only during busts. But is that true? No. If a business refuses to or cannot compete for labor, then they get put out of business to release surplus labor and capital into the economy. Moreover, labor is MOBILE! People move from state=to-state and country to country seeking work...plus there always is surplus labor to come out of the woodwork if wages rise and work begins to PAY. “full employment” is a fiction. The Fed will claim that we are at “full employment” but in the 1970s, the Fed claimed that 9% was “full employment” and anything less than 8% unemployment rate would cause runaway inflation. I still hear establishment types claiming we are going to have runaway inflation or that there is a point where inflation ‘accelerates” like a runaway truck coming down a mountain, but this is just fake economics. In Reagan’s second term, the state of Montana had double digit unemployment rate...it’s highest in history........but Montana had its lowest unemployment rate ever under Jimmy Carter because inflation helped drive commodity prices higher in a mining and farming state, whereas inflation and commodities like gold crashed under Reagan. That is why John Tester wins every time against somebody claiming to be a “Reagan Republican”.
each state is its own economy and that is why it is silly for the Fed to claim it knows what is “full employment”....and states have sub economies, too...and there are regional ones. But the Fed dual mandate is not about “full employment”, it is about maintaining “MAXIMUM EMPLOYMENT”.....which, if the Fed causes a recession...it has FAILED in its dual mandate and has broken the law.....and ends up lowering interest rates again.....so what is the point with endless tightening....as Paul Volcker said “to take away the punch bowl just as the guests arrive at the party”. People are tired of fake news, fake law, fake economics. That’s why Trump got elected/ That’s why Obama got elected.