4 ms·

IIRC, their dual mandate is: "Price stability": sounds like no inflation or deflation to me, but in fact they pursue some non-zero amount of inflation, usually

IIRC, their dual mandate is: "Price stability": sounds like no inflation or deflation to me, but in fact they pursue some non-zero amount of inflation, usually 2-3%. "Full employment": sounds like 0% unemployment to me, but in fact they target some non-zero value, around 5% I think. Targeting equity prices or other asset prices is not officially within their mandates, but given their behavior at times (e.g. suddenly dropping dovish comments when the market drops), one might start to think this is a de facto or shadow mandate. :) I think worrying about the price of the dollar is closely related to the level of inflation or uh "price stability" they are aiming for.

zzleeper 9y ago
Did you knew it's actually a triple mandate? EG: https://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/2012/february/williams-federal-reserve-mandate-best-practice-monetary-policy/ https://www.frbsf.org/our-district/press/presidents-speeches... "Let me start with the Fed’s mission. It’s often said that Congress assigned the Federal Reserve a dual mandate: maximum employment and stable prices. But, that’s not quite accurate. In fact, the Fed has a triple mandate..." Also: https://www.richmondfed.org/-/media/richmondfedorg/publications/research/economic_brief/2017/pdf/eb_17-06.pdf https://www.richmondfed.org/-/media/richmondfedorg/publicati...
- mjevans 9y ago
  Instead of baiting with quotes please reply with something substansive and discussion furthering /in your message/.
jfoutz 9y ago
If i remember macroeconomics, a little bit of deflation can spiral out of control quickly. It's hard to guarantee it'll never go less than zero if they target exactly zero. So they shoot for a little bit over. Also a little bit of inflation encourages people to find things to do with their money other than stuff it in the mattress.
majewsky 9y ago
> "Full employment": sounds like 0% unemployment to me, but in fact they target some non-zero value, around 5% I think. 3-5% sounds plausible. Even with full employment, people will be unemployed for short periods of time while they're between jobs. And these phases are going to get more significant in a gig economy, where you don't stay at the same company for 40 years anymore. Similarly, as a large-scale landlord, you can always expect some 3% of your apartments to be vacant even in markets with high demand because some time passes between the old tenant moving out of an apartment and the new tenant moving in. (Source: My father is working in that business.)

zzleeper 9y ago

Did you knew it's actually a triple mandate? EG: https://www.frbsf.org/our-district/press/presidents-speeches/williams-speeches/2012/february/williams-federal-reserve-mandate-best-practice-monetary-policy/ https://www.frbsf.org/our-district/press/presidents-speeches... "Let me start with the Fed’s mission. It’s often said that Congress assigned the Federal Reserve a dual mandate: maximum employment and stable prices. But, that’s not quite accurate. In fact, the Fed has a triple mandate..." Also: https://www.richmondfed.org/-/media/richmondfedorg/publications/research/economic_brief/2017/pdf/eb_17-06.pdf https://www.richmondfed.org/-/media/richmondfedorg/publicati...

mjevans 9y ago
Instead of baiting with quotes please reply with something substansive and discussion furthering /in your message/.

jfoutz 9y ago

If i remember macroeconomics, a little bit of deflation can spiral out of control quickly. It's hard to guarantee it'll never go less than zero if they target exactly zero. So they shoot for a little bit over. Also a little bit of inflation encourages people to find things to do with their money other than stuff it in the mattress.

majewsky 9y ago

> "Full employment": sounds like 0% unemployment to me, but in fact they target some non-zero value, around 5% I think. 3-5% sounds plausible. Even with full employment, people will be unemployed for short periods of time while they're between jobs. And these phases are going to get more significant in a gig economy, where you don't stay at the same company for 40 years anymore. Similarly, as a large-scale landlord, you can always expect some 3% of your apartments to be vacant even in markets with high demand because some time passes between the old tenant moving out of an apartment and the new tenant moving in. (Source: My father is working in that business.)