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> It has always been. Everybody wants to be popular and keep their job. That part is demonstrably false. The Fed has never been as dovish as it is now and at t

by dkrich 5y ago

> It has always been. Everybody wants to be popular and keep their job. That part is demonstrably false. The Fed has never been as dovish as it is now and at times has been extraordinarily hawkish and unkind to the equity markets- Paul Volker or Alan Greenspan, anyone? The big difference to me is that there used to be this underlying assumption that if inflation went up, the fed must act, so people didn’t freak out because of a single hike. I also believe the fed operated in far greater silence, being “data-dependent” and not fully committing for years to a single policy. Because of that everyone wasn’t laser focused on the fed. These days it’s all anyone following the markets talks about. But because the markets are so keyed in on rates and every little thing Powell says, it just tells me the next crash won’t be caused by the fed but an externality which could be far more dangerous given how far the fed is willing to let this market run unchecked.

ObserverNeutral 5y ago
What I meant is that the Fed has always been political, just look at the mandate: 1) Price stability which is a way of saying keep inflation low. That's because the population was scarred by inflation in the past and wants institutions to protect against it. 2) Maximum employment: Is there anything more political than this? People were scarred by losing their jobs in the past and want institutions to protect against such thing. If the Fed was harsh on equity markets before, then it solely means that in their perception it was the best way to be popular and keep their job. Every human wants to be popular and keep their job, so that's the motive behind every choice, doesn't matter if you are the Fed chair or the POTUS or a McDonald's employee. The only people who sort of have some freedom to sacrifice short term popularity in order to achive long term popularity are the ones which have their job as a guarantee: Dictators essentially...and only some of them.

by dkrich 5y ago

ObserverNeutral 5y ago

What I meant is that the Fed has always been political, just look at the mandate: 1) Price stability which is a way of saying keep inflation low. That's because the population was scarred by inflation in the past and wants institutions to protect against it. 2) Maximum employment: Is there anything more political than this? People were scarred by losing their jobs in the past and want institutions to protect against such thing. If the Fed was harsh on equity markets before, then it solely means that in their perception it was the best way to be popular and keep their job. Every human wants to be popular and keep their job, so that's the motive behind every choice, doesn't matter if you are the Fed chair or the POTUS or a McDonald's employee. The only people who sort of have some freedom to sacrifice short term popularity in order to achive long term popularity are the ones which have their job as a guarantee: Dictators essentially...and only some of them.