6 ms·

Central banks have one hammer really: interest rates. Everything is a nail.

• gonzo41 4y ago
  QE as well. I just don't see why they can't put conditions on some of their lending to focus the intent of the money.
  • mym1990 4y ago
    Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.
    • WaxProlix 4y ago
      This entire conversation is about how those entities don't seem to be doing a particularly good job.
      • mym1990 4y ago
        And that is a very valid concern, but the Fed is not the one to address that problem.
• Robotbeat 4y ago
  Right. It’s really up to businesses and governments. Businesses to make productive investments and governments to make the appropriate counter-cyclical investments (beyond just interest rates) to keep the productive investments more attractive than the non-productive speculative ones for businesses.
• marcosdumay 4y ago
  Governments as a whole have a lot of different hammers for monetary policy. It's just that every other one depends on the Congress understanding the problem and cooperating.
  • rib3ye 4y ago
    Central banks are not governmental organizations.
    • gumby 4y ago
      Technically they are (everybody who works for the Fed or the Bank of England gets a governmenT paycheck) and in a technical sense they aren’t, or try not to be (independent balance sheets). But they are involved in policy decisions, being consulted and themselves asking. They do t have an independent mission the way, say, a trucking company does.
    • WalterBright 4y ago
      The Federal Reserve banks are.
      • arminiusreturns 4y ago
        No they are not, though it's easy to understand the confusion. From the SF Feds website: The Board of Governors—Located in Washington, D.C., Board members are appointed by the U.S. President and confirmed by the U.S. Senate. Board members and staff are civil service employees. The 12 regional Reserve Banks—Located around the country, the 12 Federal Reserve Banks are chartered as private corporations. Employees are not civil service. The Federal Open Market Committee (FOMC)—Composed of the Federal Reserve Governors and the Federal Reserve Bank presidents, the FOMC is charged with conducting monetary policy.
        • WalterBright 4y ago
          Yes, I'm aware of the legal fiction that they are not part of the government. But they are, as they are run by people appointed by the government, and therefore serve the government.
          • arminiusreturns 4y ago
            I rather think the fiction is that they serve the government, but I also have The Creature from Jekyll Island in the backseat for light reading so my perspective probably is heavily biased.
• vkou 4y ago
  Yes, but governments have other hammers, called tax rates, and deficit spending.