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I think the fed is mostly concerned about price inflation of a reasonably moral basket of goods. They want it around 2%. It's the "vig" for participating in ec

I think the fed is mostly concerned about price inflation of a reasonably moral basket of goods. They want it around 2%. It's the "vig" for participating in economic life. Employment and everything else will take care of itself.

Danieru 7y ago
The US Fed has a dual mandate of both full employment and inflation control. Other central banks around the world only have mandates for inflation control, but the US is special in this regard.
- blazespin 7y ago
  It's just political / PR nonsense. The fed doesn't care about employment (except how it impacts prices). And they shouldn't. If they did, they'd risk hyper inflation and things for everyone would get much much worse. Anyways, the fed can only do so much but try to keep the laws of physics in place. Government spending, Entitlements and taxes are the real levers of economic influence. US government policy has traditionally relied on a combination of entrepreneurs and military might for global economic mastery. Trump is (ironically) undermining military might by destabilizing alliances. Entrepreneurs are doing ok. He is increasing labor participation or at least stopping the decline. This all is making global economy more efficient and meritorious. Trade wars are bad, yes, but China was/is a bad actor and was perverting the US economy by making it lazy. Trump is trying to kick it in the ass and get it going again. I hate Trump, but my feeling is that these fed injections might just be the fact that global efficiencies are pushing rates down below what the fed is comfortable with. We will pay for all of this in other ways no doubt, eg, climate change, weaker social safety nets, nuclear proliferation, etc. Short term, things look good. Longer term there are reasons to freak out. It's not really trumps fault though, people just generally can't reason with the fact that you can make things good and bad at the same time, so arguments and debates are all pretty much irrational. Why not vote in Trump, nobody else is making sense either. Andrew Yang is a perfect example, the only guy who is talking sanity but is at 3% in the polling.
  - QuesnayJr 7y ago
    They really do care about employment. Fed behavior can be approximated by a Taylor rule: https://en.wikipedia.org/wiki/Taylor_rule https://en.wikipedia.org/wiki/Taylor_rule
    - craftinator 7y ago
      Cause or effect?
  - fredophile 7y ago
    Was labour participation declining before Trump took office? I thought unemployment rates had been dropping since about the end of the great recession. > Trump is trying to kick it in the ass and get it going again. Get what going again? The economy? When exactly did it stop going?
    - blazespin 7y ago
      https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART Most Service jobs are bullshit jobs, IMHO. Trump is trying to bring back manufacturing. Taylor rule is overridden by inflationary factors 'That is, the rule "recommends" a relatively high interest rate (a "tight" monetary policy) when inflation is above its target or when output is above its full-employment level, in order to reduce inflationary pressure. It recommends a relatively low interest rate ("easy" monetary policy) in the opposite situation, to stimulate output. Sometimes monetary policy goals may conflict, as in the case of stagflation, when inflation is above its target while output is below full employment. In such a situation, a Taylor rule specifies the relative weights given to reducing inflation versus increasing output. Anyways, it's not the job of an unelected fed central bank to worry about employment. What does that even mean? Are gig jobs employment? You really need legislators for these types of sticky questions. The fed job is to look at things people have to buy / pay for and try to keep them stable price wise, but not so stable people just stuff their excess money into their mattresses.
  - quintushoratius 7y ago
    > It's not really trumps fault though, people just generally can't reason with the fact that you can make things good and bad at the same time, so arguments and debates are all pretty much irrational. Why not vote in Trump, nobody else is making sense either. Part of being good at your job, as president, is finding ways to meet demands without sacrificing the future. You seem to be suggesting that any president would do the same as Trump in this situation, but I think that's wrong This isn't a binary choice, there is a middle ground where you're not goosing the economy but you're keeping it running, and setting up for a soft landing rather than a crash. This isn't it.
- dmix 7y ago
  Isn’t there a limit on how low the employment rate should be? Since a small percentage is healthy and normal? I’m curious what full employment means in practice.
  - QuesnayJr 7y ago
    It is thought that the optimal level of unemployment is higher than zero, because people quit jobs to look for new ones, etc. One version of this idea is the NAIRU: https://en.wikipedia.org/wiki/NAIRU https://en.wikipedia.org/wiki/NAIRU It's hard to know what this level is, though.

Danieru 7y ago

The US Fed has a dual mandate of both full employment and inflation control. Other central banks around the world only have mandates for inflation control, but the US is special in this regard.

blazespin 7y ago
It's just political / PR nonsense. The fed doesn't care about employment (except how it impacts prices). And they shouldn't. If they did, they'd risk hyper inflation and things for everyone would get much much worse. Anyways, the fed can only do so much but try to keep the laws of physics in place. Government spending, Entitlements and taxes are the real levers of economic influence. US government policy has traditionally relied on a combination of entrepreneurs and military might for global economic mastery. Trump is (ironically) undermining military might by destabilizing alliances. Entrepreneurs are doing ok. He is increasing labor participation or at least stopping the decline. This all is making global economy more efficient and meritorious. Trade wars are bad, yes, but China was/is a bad actor and was perverting the US economy by making it lazy. Trump is trying to kick it in the ass and get it going again. I hate Trump, but my feeling is that these fed injections might just be the fact that global efficiencies are pushing rates down below what the fed is comfortable with. We will pay for all of this in other ways no doubt, eg, climate change, weaker social safety nets, nuclear proliferation, etc. Short term, things look good. Longer term there are reasons to freak out. It's not really trumps fault though, people just generally can't reason with the fact that you can make things good and bad at the same time, so arguments and debates are all pretty much irrational. Why not vote in Trump, nobody else is making sense either. Andrew Yang is a perfect example, the only guy who is talking sanity but is at 3% in the polling.
- QuesnayJr 7y ago
  They really do care about employment. Fed behavior can be approximated by a Taylor rule: https://en.wikipedia.org/wiki/Taylor_rule https://en.wikipedia.org/wiki/Taylor_rule
  - craftinator 7y ago
    Cause or effect?
- fredophile 7y ago
  Was labour participation declining before Trump took office? I thought unemployment rates had been dropping since about the end of the great recession. > Trump is trying to kick it in the ass and get it going again. Get what going again? The economy? When exactly did it stop going?
  - blazespin 7y ago
    https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART Most Service jobs are bullshit jobs, IMHO. Trump is trying to bring back manufacturing. Taylor rule is overridden by inflationary factors 'That is, the rule "recommends" a relatively high interest rate (a "tight" monetary policy) when inflation is above its target or when output is above its full-employment level, in order to reduce inflationary pressure. It recommends a relatively low interest rate ("easy" monetary policy) in the opposite situation, to stimulate output. Sometimes monetary policy goals may conflict, as in the case of stagflation, when inflation is above its target while output is below full employment. In such a situation, a Taylor rule specifies the relative weights given to reducing inflation versus increasing output. Anyways, it's not the job of an unelected fed central bank to worry about employment. What does that even mean? Are gig jobs employment? You really need legislators for these types of sticky questions. The fed job is to look at things people have to buy / pay for and try to keep them stable price wise, but not so stable people just stuff their excess money into their mattresses.
- quintushoratius 7y ago
  > It's not really trumps fault though, people just generally can't reason with the fact that you can make things good and bad at the same time, so arguments and debates are all pretty much irrational. Why not vote in Trump, nobody else is making sense either. Part of being good at your job, as president, is finding ways to meet demands without sacrificing the future. You seem to be suggesting that any president would do the same as Trump in this situation, but I think that's wrong This isn't a binary choice, there is a middle ground where you're not goosing the economy but you're keeping it running, and setting up for a soft landing rather than a crash. This isn't it.
dmix 7y ago
Isn’t there a limit on how low the employment rate should be? Since a small percentage is healthy and normal? I’m curious what full employment means in practice.
- QuesnayJr 7y ago
  It is thought that the optimal level of unemployment is higher than zero, because people quit jobs to look for new ones, etc. One version of this idea is the NAIRU: https://en.wikipedia.org/wiki/NAIRU https://en.wikipedia.org/wiki/NAIRU It's hard to know what this level is, though.