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Comment by ikeboy | Hacker News Reader

I'm critiquing the framing in OP.

>But we have no political imagination or will to think beyond what is forced down our throats. Either the Federal Reserve saves us all or we are doomed.

I wouldn't view it as saving. The Fed's job is to stabilize prices and employment. If you think a different part of the government should be responsible for that, or if you think we shouldn't stabilize it at all (but then how much money should be printed? Should we abolish monetary policy completely?), then make that argument. But don't criticise the Fed for trying to do its job of ensuring price stability. When something happens that significantly decreases inflation, then the Fed responds by printing more money. It's not somehow "neutral" if the Fed were to ignore that and allow prices to drop.

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> The Fed's job is to stabilize prices and employment.

> But don't criticise the Fed for trying to do its job of ensuring price stability.

By your own analysis, you're missing something here.

How's the Fed doing with that mandate?

You don't think there's room for criticism?

I think the proper critique is exactly the opposite - that they're not doing enough. Inflation is expected to be well below target over the next decade.

Critiques that they're doing too much fall completely flat, for me.

You're ignoring the employment part of the mandate.

Unprecedented levels of Fed intervention hasn't prevented 41 million (and counting) new unemployment filings in just a few months.

This obsessive focus on propping up financial markets without more direct support for Main St is what I mean about lack of political imagination or will.

We don't want to have full employment now for obvious reasons. Fed policy should be to enable full employment after the lockdowns are fully lifted, not now.

Congress passed extra unemployment insurance plus other payroll support. The Fed shouldn't duplicate that.

We don’t have full employment because the Fed is failing its mandate. That’s pretty clear.

> Fed policy should be to enable full employment after the lockdowns are fully lifted, not now.

This is out of touch. The lockdowns are already lifting and as we will see, you don’t just bring back 41+ million jobs at the drop of a hat.

As long as prices (read: stock and bond markets) are stabilized, many of us don’t care.

> We don’t have full employment because the Fed is failing its mandate.

The Fed has a dual mandate; employment promotion and inflation management. To the extent that the tools they have, which are limited, are insufficient to adequately promote employment while managing inflation, doing more for employment is what Congress and it's broader power of fiscal poki g setting is for.

Admittedly, Congress—most specifically the Senate—is asleep at the switch, but that's not the Fed’s fault.

> Admittedly, Congress—most specifically the Senate—is asleep at the switch, but that's not the Fed’s fault.

It absolutely is the Fed's fault. We are still paying for the sins of the GFC and Fed policy has enabled Congressional dysfunction. Without extremely accommodative Fed policy for the past 10+ years, Congress would be forced to do their job.

You are basically saying that it's the Fed’s fault because the Fed is actually doing the job that it is assigned by law, and if it completely failed there would be more pressure on Congress to do something.

But if Congress doesn't want to do it's job, even if the Fed were completely negligent, you have to conclude they would only do enough to relieve the pressure to roughly the point where things are now, if they were even competent enough to not screw that up.

If you want to blame someone other than Congress for Congress's nonfeasance (and “Congress” in the sense includes the President, who plays both a formal and informal role in legislation), maybe blame the people that choose and retain the nonfeasant officers, rather than the Fed for doing its job well enough in the face of the nonfeasance elsewhere that the wheels don't come completely off.

Can you give a single example where the Fed has ever, in any way, impeded congress from passing laws?

>The lockdowns are already lifting and as we will see, you don’t just bring back 41+ million jobs at the drop of a hat.

Well as I already said above, the Fed isn't doing enough. They aren't stabilizing prices. If they were, the economic recovery would be much quicker.

Also, prices is not the same as stock and bonds. The Fed is perfectly fine with stock or bond drops, as long as they don't cause prices to drop. Stocks dropped over 20% in one day in 1987, but we avoided a recession because the Fed ensured prices remained stable.

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