Posted on 03/08/2022 6:48:28 AM PST by oblomov
For every Republican economist the system employs, it has more than 10 Democrats.
President Biden’s nomination of two progressive economists to key positions at the Federal Reserve has triggered accusations from conservatives and Republicans that the president is trying to politicize the Fed. But it’s too late; the central bank is already deeply politicized.
Congress mandates that the Federal Reserve promote price stability and full employment. Yet even as inflation rages, the Fed’s economists increasingly have been focused on issues such as climate change, race and sex discrimination, and economic inequality. Since 2020 the Fed’s regional banks and Board of Governors have conducted numerous seminars and conferences and published voluminous research papers on these politically charged topics.
Several regional banks have explicitly indicated their partisan commitments. The New York Fed announces on its homepage that it “stands in unity with all those who oppose racism, hate, and violence.” It wishes “to root out the intolerable inequities and injustice grounded in systemic racism that persist in our society” and believes this job won’t be done “until access to health, education, safety, and justice knows no racial or other boundaries.”
What is the source of this mission drift? The answer, I believe, is simple: Many of the key research and analysis positions in the Federal Reserve System are held by left-leaning Democrats.
I recently set out to determine the political affiliation of every Federal Reserve System economist using various state, county and city voter-registration databases. What I found was that in 2021 the overall Democrat-to-Republican ratio was 10.4 to 1. For every Republican economist at the Federal Reserve System, there are more than 10 Democrats. The lack of political diversity is especially pronounced among the economists of the Board of Governors, where the ratio is 48.5 to 1.
(Excerpt) Read more at wsj.com ...
Since 1913.
The Federal Reserve is a privately-owned banking consortium that acts in the best interests of the robber Barrons that own it.
In one sense, it would almost be better if it WAS more “politicized”, if that would make it somehow accountable to the voting public.
The Creature from Jekyll Island.
As long as that remains their focus, regardless of what crap gets published, I consider them not-politicized.
As far as I can tell the FED is acting to maintain full employment. They've done exceptionally well at maintaining stable prices since the Great Depression. The current inflation is an aberration. It has been brought on by the pandemic and government responses to the pandemic, Democrat anti-energy policies, supply chain issues and now war.
The Federal Reserve is a privately-owned banking consortium that acts in the best interests of the robber Barrons that own it.
************
It was no accident that the Fed was conceived and created at an exclusive seaside enclave for financiers and politicians.
You have to be joking.
While I agree on the deleterious effects of Dem policies, the Fed has done a horrible job of maintaining price stability.
They’ve done great actually.
Go back and look at the annual price swings that were occurring prior to the creation of the FED. Back when we were on the gold standard. We frequently had 20% swings in purchasing power year to year. And every 20 years we had a deflationary depression with massive business and bank failures and huge amounts of foreclosures.
The FED targets a small amount of inflation. And unless you’re hiding cash in your mattress for 50 years, it works really well. It provides an incentive not to hoard cash but to invest.
But it does make a scary chart until you realize that it’s an 80 year chart and the nation has done very well during that time.
There’s no institution the left hasn’t taken over.
Their long march through the institutions, while we slept, has been a roaring success for them... and an unmitigating disaster for us.
And it’s something that winning elections won’t change much.
“Inflation targeting” works until it doesn’t.
The fact is, the Fed is unable to raise interest rates much, certainly not enough to counter the strong commodity price inflation we’re currently experiencing.
This is not supply-side inflation due to interruption in supply chains, as some economists have claimed. It’s demand-driven. The Fed can’t address this demand-side inflation without jeopardizing the fiscal position of the US itself.
We are nearing a point when even with massive tax increases, either there will need to be big cuts to SS & Medicare/Medicaid, or Fedgov won’t be able to make interest payments on the debt. And then, even after more tax increases, the revenue will be insufficient even after cuts to entitlements.
This was the path taken in the late 90s. We’re just starting to experience to consequences of the poor decisions made then.
“Politicized” will have no meaning related to the Fed anymore.
As they go all-in with Digital Currency and Social Credit, the correct word will be “tyrannical”.
I disagree.
I think the FED can solve the US borrowing problem, buy buying a portion of the treasury offerings. That interest paid by the US then just flows right back to the Treasury in the annual remittance of Federal Reserve profits to the Treasury.
Effectively, I think they can bifurcate Treasury borrowings from the general market.
So if the US needs to borrow $2 Trillion. And interest rates rise to 10% (I hope not). The FED buys $1 trillion.
The US pays $200 billion interest. But $100 billion interest flows to the Federal Reserve which remits it as profit back to the Treasury.
Effectively the US is paying 2%, while market rates remain at 4%.
There may be moral hazard with such an approach. But the markets get their higher interest rates while the US remains solvent. (Provided the democrats don’t remain in office much longer).
Aaggh, I switched in my example from 10% to 4% midthought.
Let me repost that...
Effectively the US is paying 5%, while market rates remain at 10%. (US pays 10% but half comes back to the treasury)
The Federal Reserve must be political - it centrally plans the most important commodity of all - money. And Money is the most basic motivating factor in human action, besides perhaps for love.
I will say in the FED’s favor though - washington DC is full of woke, arrogant and stupid central planners, influencing the economy in one way or another with taxes, regulation, mandates, spending, etc...
ALL of them have given up responsibility for the consequences actions - and have dumped it on the Fed, who can only respond with various forms of QE, money printing and interest rate manipulation.
So monetize the debt, printing new dollars to buy the treasuries that no one else wants? What could go wrong?
This is the longstanding dream of socialists. I’m sure you’ll find a lot of support for this idea in the new, multicultural, diversity-focused, leftist-captive Fed.
A lot can go wrong. but that’s definitely a way that the FED an raise interest rates without sinking the US govermment.
I don’t think the FED is going to need to raise interest rates. The markets are tanking. And if they revert to mean pricing, it’s going to be a major wipeout.
With the oil price increases, we are headed into a recession. Demand will drop off and prices will come back down.
This is so very wrong. By their very own sober central-planning statements, they want to keep inflation at 2% per year. So $1 you earned in 2000 is now worth about 60 cents.
Its theft, pure and simple
But oil prices ran up because of poor Dem policies. And in “Dem policies”, I include the willingness of the Fed to forgo any response until they started jawboning markets down late last year.
Look at the appointees on the Fed Board of Governors- it’s majority Dem.
I agree that it’s unlikely that the Fed will raise significantly, if at all, in its March meeting.
Lesson: don’t put your cash in a mattress for 22 years. You’ll lose purchasing power.
But if you’re a business, losing just 2% a year creates a very stable decision making environment.
And again relative to what. 20% annual swings that we had before the creation of the Federal Reserve? Imagine that $1 you earned YEAR BEFORE LAST was only worth 60 cents. And then you realize how much better the Federal Reserve has performed.
Its like saying - don't want to get raped? Well don't go out at night.
So where to put ones money? Into the stock market, where drawdowns of 20% or more happen every few years? THAT is not a reasonable suggestion for working-class Americans. How about instead - NOT stealing their labor/wages, and transferring it to government and Wall Street?
As to pre 1913 - I absolutely disagree. The system was very stable, and deflation via productivity growth allowed for the greatest growth in power of the nation and wealth of citizens in history. Post 1913 has NOT been stable - we have had a GREAT Depression, we have had two world wars, we had 1970's inflation, we the 2008 GREAT recession, we have had many market crashes.
I can't understand why "conservatives" loathe central planning by government in all forms - except monetary central planning.
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