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The job of the Fed is to maintain inflation and employment targets. Since both inflation and employment are below target, they are engaging in an expansionary m

by MiroF 6y ago

The job of the Fed is to maintain inflation and employment targets. Since both inflation and employment are below target, they are engaging in an expansionary monetary policy. I'm honestly baffled by so many people thinking that a contractionary stance would be better?

grey-area 6y ago
Doesn't seem like the levers they have are working. Economic growth rather than inflation is the goal. The measures are not the goal. Maybe that needs massive investment rather than monetary policy. Certainly QE has had many other impacts, but it hasn't led to a positive change in the measure that matters - consumer price inflation.
- MiroF 6y ago
  > Doesn't seem like the levers they have are working. Economic growth rather than inflation is the goal. Nope, economic growth is not the goal. Inflation targeting and unemployment targeting is the goal. I don't see how you can claim that the levers "aren't" working if you don't know what would have occurred without the Fed action.
  - Talanes 6y ago
    The other poster said "doesn't seem," which is already an admittance that it is just anecdotal observation. I'm also not sure what you're hoping to accomplish here. Yes, quantifiable claims are better than subjective ones, but "no one knows what would have happened otherwise" is just an argument that justifies literally any action.
    - MiroF 6y ago
      > just an argument that justifies literally any action. I'm saying having a model for what you're talking about and also having empirical research about what has happened with similar interventions on the aggregate is good. Looking at a single intervention in response to a massive calamity and saying "well that didn't work because things were bad after!" is what I'm trying to critique.
aeternum 6y ago
We should consider that the fed's methods of measuring inflation and/or injecting capital could be flawed. If the money injected by the fed is not making it to consumers, then we should expect that inflation measured via some kind of consumer price index would not move.
- MiroF 6y ago
  > consumers Consumers take out loans, that's a fact. Interest rates are lower, that's also a fact. Therefore, the money is making it to consumers. If the Fed is able to expand the monetary supply without inflation, then that is a good thing (again) and the Fed should continue doing so until inflation does move.
  - aeternum 6y ago
    Have a significant number of consumers taken out new loans? What percentage of consumers actually benefit, especially if they do not purchase a new home? >If the Fed is able to expand the monetary supply without inflation, then that is a good thing Expanding the money supply alone does not seem like the right goal. Suppose the fed decided to expand the money supply by cutting a check to the top 1%. I wouldn't expect to see any inflation in the pricing of general consumer goods since that segment of the population just isn't competing for those goods.

by MiroF 6y ago

grey-area 6y ago

Doesn't seem like the levers they have are working. Economic growth rather than inflation is the goal. The measures are not the goal. Maybe that needs massive investment rather than monetary policy. Certainly QE has had many other impacts, but it hasn't led to a positive change in the measure that matters - consumer price inflation.

MiroF 6y ago
> Doesn't seem like the levers they have are working. Economic growth rather than inflation is the goal. Nope, economic growth is not the goal. Inflation targeting and unemployment targeting is the goal. I don't see how you can claim that the levers "aren't" working if you don't know what would have occurred without the Fed action.
- Talanes 6y ago
  The other poster said "doesn't seem," which is already an admittance that it is just anecdotal observation. I'm also not sure what you're hoping to accomplish here. Yes, quantifiable claims are better than subjective ones, but "no one knows what would have happened otherwise" is just an argument that justifies literally any action.
  - MiroF 6y ago
    > just an argument that justifies literally any action. I'm saying having a model for what you're talking about and also having empirical research about what has happened with similar interventions on the aggregate is good. Looking at a single intervention in response to a massive calamity and saying "well that didn't work because things were bad after!" is what I'm trying to critique.

aeternum 6y ago

We should consider that the fed's methods of measuring inflation and/or injecting capital could be flawed. If the money injected by the fed is not making it to consumers, then we should expect that inflation measured via some kind of consumer price index would not move.

MiroF 6y ago
> consumers Consumers take out loans, that's a fact. Interest rates are lower, that's also a fact. Therefore, the money is making it to consumers. If the Fed is able to expand the monetary supply without inflation, then that is a good thing (again) and the Fed should continue doing so until inflation does move.
- aeternum 6y ago
  Have a significant number of consumers taken out new loans? What percentage of consumers actually benefit, especially if they do not purchase a new home? >If the Fed is able to expand the monetary supply without inflation, then that is a good thing Expanding the money supply alone does not seem like the right goal. Suppose the fed decided to expand the money supply by cutting a check to the top 1%. I wouldn't expect to see any inflation in the pricing of general consumer goods since that segment of the population just isn't competing for those goods.