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> The Federal Reserve has been raising its benchmark interest rate since December 2015, and will probably do so again this month, from a range of 1.75-2% to 2-2

> The Federal Reserve has been raising its benchmark interest rate since December 2015, and will probably do so again this month, from a range of 1.75-2% to 2-2.25%. > This is the central banker’s version of twiddling the bath taps, but on a national scale. It requires a delicate touch. Too much cold water, in the form of higher rates, will choke off demand and hence jobs. Too much hot, and rising inflation will eat away at people’s spending power. The aim is to find the perfect temperature, where employment is as high as it can be while inflation stays subdued. > It is as if the rate-setters must adjust the flow of hot and cold water not only without knowing what temperature is most comfortable, but also without knowing how hot the bath is to begin with—or when they will be getting in. Reading this, you'd swear we were living in a communist society where academics and policy makers are smart enough to centrally plan the economy and to guess what the price of the most important thing in our civilization should be - money.

sk_hazratali 8y ago
I agree. https://www.sherekhudahazratali.com/2018/09/imam-hasan-o-hussain-phool-hain.html https://www.sherekhudahazratali.com/2018/09/imam-hasan-o-hus...
AmericanChopper 8y ago
Controlling the supply of money is all the Fed is doing here, which is nothing even similar to central planning.
- spectrum1234 8y ago
  There is no free market on the price of money. This is exactly central planning.
  - beat 8y ago
    Then central planning is a Good Thing.
  - AmericanChopper 8y ago
    A centrally planned economy is where a single central authority determines how investment and capital will be allocated. Controlling the supply of money is not capital allocation, and it is not central planning. Central planning is not simply any time a central authority does anything at all.
    - mifreewil 8y ago
      > A centrally planned economy is where a single central authority determines how investment and capital will be allocated. I think you might be getting too semantic here. If you looked up the definition of a centrally-planned economy in an academic economics book, that might be what you get. When the Fed or any central bank lets one institution fail, saves another, buys more or less government debt, purchases mortgage-backed securities, or any other security, I don't see how you could not call that central planning, investment, or capital allocation.
      - AmericanChopper 8y ago
        Because in this case no central authority has a monopoly on resource allocation, or even anything that comes close to a meanful level of control over resource allocation. Central planning is a very well defined system of economics, and involves an authority taking almost complete control of the supply side. The federal reserve system does not resemble this in any way. The Fed isn’t particularly interested in how resources are allocated, and generally only concerns itself with the supply of money, and maintaining stability in the market. It has no opinion on what goods and services should be supplied. The existence of a central bank does not equate to a planned economy.
        bachbach 8y ago
        Can you outline a scenario in which there exists no central bank? While everything you have said is true, I feel as though there exist giant icebergs gliding silently past your watertight steel hull.
        8y ago
nickik 8y ago
If you have a Fiat money then you must have a control mechanism. But not doing anything is just as much a centrally planned policy in a fiat money system as doing a lot of stuff. And just btw, if you actually study economic history you will see that the monetary system before fiat central banks also adjusted monetary supply just threw a different mechanism. I would prefer something different then the Fed. And a more clear set of rules what they should do and when.
prolikewh0a 8y ago
>you'd swear we were living in a communist society Communism has no money though? Time to read what Communism actually means!
- maerF0x0 8y ago
  In my experience nearly everyone who is against communism means communism as we've seen it practiced in the 20th century. Not communism as ideally described in books.
beat 8y ago
You realize that the very premise of Wall Street is in large part "guess the price of money".
- mifreewil 8y ago
  Yes, the opposite of the Fed, who tries to influence it through their special privilege of monetary policy.

sk_hazratali 8y ago

I agree. https://www.sherekhudahazratali.com/2018/09/imam-hasan-o-hussain-phool-hain.html https://www.sherekhudahazratali.com/2018/09/imam-hasan-o-hus...

AmericanChopper 8y ago

Controlling the supply of money is all the Fed is doing here, which is nothing even similar to central planning.

spectrum1234 8y ago
There is no free market on the price of money. This is exactly central planning.
- beat 8y ago
  Then central planning is a Good Thing.
- AmericanChopper 8y ago
  A centrally planned economy is where a single central authority determines how investment and capital will be allocated. Controlling the supply of money is not capital allocation, and it is not central planning. Central planning is not simply any time a central authority does anything at all.
  - mifreewil 8y ago
    > A centrally planned economy is where a single central authority determines how investment and capital will be allocated. I think you might be getting too semantic here. If you looked up the definition of a centrally-planned economy in an academic economics book, that might be what you get. When the Fed or any central bank lets one institution fail, saves another, buys more or less government debt, purchases mortgage-backed securities, or any other security, I don't see how you could not call that central planning, investment, or capital allocation.
    - AmericanChopper 8y ago
      Because in this case no central authority has a monopoly on resource allocation, or even anything that comes close to a meanful level of control over resource allocation. Central planning is a very well defined system of economics, and involves an authority taking almost complete control of the supply side. The federal reserve system does not resemble this in any way. The Fed isn’t particularly interested in how resources are allocated, and generally only concerns itself with the supply of money, and maintaining stability in the market. It has no opinion on what goods and services should be supplied. The existence of a central bank does not equate to a planned economy.
      - bachbach 8y ago
        Can you outline a scenario in which there exists no central bank? While everything you have said is true, I feel as though there exist giant icebergs gliding silently past your watertight steel hull.
        8y ago

nickik 8y ago

If you have a Fiat money then you must have a control mechanism. But not doing anything is just as much a centrally planned policy in a fiat money system as doing a lot of stuff. And just btw, if you actually study economic history you will see that the monetary system before fiat central banks also adjusted monetary supply just threw a different mechanism. I would prefer something different then the Fed. And a more clear set of rules what they should do and when.

prolikewh0a 8y ago

>you'd swear we were living in a communist society Communism has no money though? Time to read what Communism actually means!

maerF0x0 8y ago
In my experience nearly everyone who is against communism means communism as we've seen it practiced in the 20th century. Not communism as ideally described in books.

beat 8y ago

You realize that the very premise of Wall Street is in large part "guess the price of money".

mifreewil 8y ago
Yes, the opposite of the Fed, who tries to influence it through their special privilege of monetary policy.