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The Fed's job is supposed to be to keep inflation stable. Inflation is as stable as it's ever been. If stock prices go down, that means nothing to inflation. So

The Fed's job is supposed to be to keep inflation stable. Inflation is as stable as it's ever been. If stock prices go down, that means nothing to inflation. Somehow, since Greenspan, the Fed's job evolved to include pumping up asset prices to benefit asset owners (the top 5% own 80% of assets).

mxschumacher 7y ago
The fed's target is 2% inflation, not stability of the inflation rate. You could say the relative stability of the value of money is a goal
- OscarCunningham 7y ago
  I think you have it backwards. Stability is the overall target, and the 2% target was chosen as a way to achieve that. See for example https://www.federalreserve.gov/faqs/money_12848.htm https://www.federalreserve.gov/faqs/money_12848.htm. > The objectives as mandated by the Congress in the Federal Reserve Act are promoting (1) maximum employment, which means all Americans that want to work are gainfully employed, and (2) stable prices for the goods and services we all purchase. > Following its meeting in January 2012, the FOMC issued a statement regarding its longer-run goals and monetary policy strategy. The FOMC noted in its statement that the Committee judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's statutory mandate.
seirl 7y ago
Wrong. The Fed has a dual mandate, they have to keep inflation and unemployment stable. Recessions are bad for employment, it turns out.
- kmonsen 7y ago
  It also has a third mandate, get republican presidents re-elected and this is where this boost comes in handy.
- onlyrealcuzzo 7y ago
  So is the Fed's job to make sure everyone is employed? Unemployment is at an all time low. With a normal spike an unemployment from a normal recession, we would be at normal levels of unemployment.
- SilasX 7y ago
  You could have a stock market crash while hitting full employment, for any number of reasons e.g. non-listed companies expand while listed contract; families scale down and take earners off the market; war mobilization that involves long-term high taxes; and probably all kinds of scenarios I'm not thinking of. "Stopping recessions" is not an automatic justification for propping up asset prices.

mxschumacher 7y ago

The fed's target is 2% inflation, not stability of the inflation rate. You could say the relative stability of the value of money is a goal

OscarCunningham 7y ago
I think you have it backwards. Stability is the overall target, and the 2% target was chosen as a way to achieve that. See for example https://www.federalreserve.gov/faqs/money_12848.htm https://www.federalreserve.gov/faqs/money_12848.htm. > The objectives as mandated by the Congress in the Federal Reserve Act are promoting (1) maximum employment, which means all Americans that want to work are gainfully employed, and (2) stable prices for the goods and services we all purchase. > Following its meeting in January 2012, the FOMC issued a statement regarding its longer-run goals and monetary policy strategy. The FOMC noted in its statement that the Committee judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's statutory mandate.

seirl 7y ago

Wrong. The Fed has a dual mandate, they have to keep inflation and unemployment stable. Recessions are bad for employment, it turns out.

kmonsen 7y ago
It also has a third mandate, get republican presidents re-elected and this is where this boost comes in handy.
onlyrealcuzzo 7y ago
So is the Fed's job to make sure everyone is employed? Unemployment is at an all time low. With a normal spike an unemployment from a normal recession, we would be at normal levels of unemployment.
SilasX 7y ago
You could have a stock market crash while hitting full employment, for any number of reasons e.g. non-listed companies expand while listed contract; families scale down and take earners off the market; war mobilization that involves long-term high taxes; and probably all kinds of scenarios I'm not thinking of. "Stopping recessions" is not an automatic justification for propping up asset prices.