Posted on 05/19/2022 12:32:08 PM PDT by nickcarraway
There is seldom any meaningful accountability for government incompetence.
After presiding over the biggest Federal Reserve failure in 40 years and with inflation rating as the top concern among Americans, Jerome Powell's nomination to a second term as chairman was approved this past week by the Senate, 80–19.
I know the usual arguments for ignoring the Fed's spectacular errors, even at a time when inflation is such an issue. Most common are that other candidates would be even worse or that we need continuity. Maybe. The truth, though, is that a good person facing bad incentives in that job will make poor choices. Add in a lack of accountability and you repeatedly get bad policies. That type of continuity is not that appealing to me.
Inflation is rising globally, but it's much worse in the United States, largely because of the excessive spending legislated in early 2021 via the American Rescue Plan (ARP). Powell was a giddy cheerleader for the $2 trillion, which many warned would cause inflation—especially as the Fed announced it would continue its overly accommodating monetary policy with no end in sight.
When inflation started to pick up, Powell argued that it was "transitory" because it was the product of supply-chain constraints. Apparently, no one at the Fed checked how many goods were getting through the ports. If they had, they would have known that by the end of 2020, more goods were getting through than before the pandemic. Also, in 2021, most countries barely suffered any inflation, which is incompatible with the theory that inflation is caused by global supply-chain disruptions.
And so, right under the chairman's nose, inflation accelerated.
Powell didn't just ignore the Fed's mandate to pursue price stability; he flouted this mandate with "innovative" inflation targeting. This was supposed to allow the economy—and inflation—to run hot in the name not only of reducing unemployment (another Fed mandate), but also the pursuit of shiny goals such as encouraging "inclusive" growth.
When the chairman at the end of 2021 acknowledged that we had inflation, he still did very little about it. He didn't stop the Fed's purchase of treasuries until March 2022. Very small rate hikes were announced well into 2022, which likely will not be enough to tame inflation. Stunningly, many people still believed that those who failed to see inflation coming could engineer something that has never been done successfully in the past: a soft landing.
The reasons for this failure are many. A big one is that most people at the Fed, and in various agencies and outside of government, worship at the altar of Keynesian thinking. They believe that government spending solves all economic problems. Another source of failure is poor incentives. Politicians and bureaucrats (including the chairman) don't have the benefit of profit-and-loss signals sent by the market.
Most bureaucrats in executive agencies are also unelected and unappointed by the Senate, and, thus, are largely unaccountable to the public. Who will, for instance, lose their job at the Centers for Disease Control and Prevention for their many mistaken COVID-19 recommendations and diktats, including those on school closures and masking? The consequences will be paid by children for years to come but not by those responsible.
The need to secure Senate confirmation is no guarantee that higher-level bureaucrats will be held accountable, as evidenced by Powell's own nomination. But that too could be because senators aren't terribly accountable themselves.
Indeed, research shows that ordinary citizens don't often vote their representatives out of office for their big failures. In part, it's because many voters are rationally ignorant, as most can't or don't keep track of all the votes of everyone in Congress, or even of their own representatives on issues they truly care about.
Voters, for instance, often let politicians get away with failing to deliver on campaign promises. Republicans rarely suffer for claiming to support small government on the campaign trail but spending through the nose while in office. Meanwhile, Democratic legislators pretend to be the big defenders of lower-income voters and small business while supporting every crony program favoring large companies, hindering competition and raising prices at the expense of consumers.
Finally, the now-common practice of voting against a candidate, rather than for one, isn't conducive to accountability, either.
I therefore should not be shocked that Powell's renomination as Fed chairman sailed through the Senate. Under these circumstances, don't be surprised by the continued pursuit of bad policies.
So Trump, Biden, and Obama all like the same guy? Obama put him on the Board of Governors, Trump made him Chair, and Biden renominated him as chair. That must mean he’s great.
TRANSITORY
He delayed increasing the interest rate which added fire to the inflationary pressures.
Even worse, he raised the interest rates which caused the stock market to crash.
What a horrible man.
The alternative would be some activist commie so he was the only choice by default
Even though he sucks.
What does that mean?
So you are complaining that he didn’t raise interest rates, and that he did raise interest? In fairness, he was only continuing in the foolish tradition of Yellen and Bernanke.
transitory is a very long time.
Yes, it can be painful to raise interest rates. But the alternative is, keeping interest rates so low for about 20 years is that can cause inflation and long term stagnation. Ever seen Japan in the 90s?
The alternative for who?
Powell kept stating for the last year that this price inflation was only TRANSITORY.
Meaning that it was going to be short lived, brief.
We all know that was BS.
We dod’t need a Fed. Ask Mr. Paul(Ron).
They might have to change the definition in Websters.
tran·si·to·ry
not permanent
synonyms:
temporary · transient · brief · short · short-lived · short-term · impermanent · ephemeral · evanescent · momentary · fleeting · flying · passing · fugitive · flitting · fading · mutable · unstable · volatile · here today and gone tomorrow
right under the chairman’s nose, inflation accelerated.
As it was supposed to do.
Powell isn’t stupid...this is a feature, not an Oh gee...what happened?
Lets see, the Senate is 50-50.Hmmmmm? Traitors are in the woodshed.
They are doing want they want.
You are going to get four full years of political and economic education from Screw You.
The people get what they want, or at least what they don't work hard enough to get rid of.
Take it from Joe, they think inflation is GREAT!
Never mind the further impoverishment of about 40 million redundant retirees.
Two new swimming pools are going in on my street.
There are people rolling in money.
A Haitian landscape worker gave me a business card today. Little did he know that my income is low even by Haitian standards. I will give the card to my high retirement income Democratic neighbors, as I think he will do good work at a good price.
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