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What's your offered solution? Throw our hands up and just go back to bartering? The federal reserve doesn't micromanage the economy (throwing rocks into the lak
by its_ethan 4y ago
What's your offered solution? Throw our hands up and just go back to bartering? The federal reserve doesn't micromanage the economy (throwing rocks into the lake, as you put it) they have a few levers at their disposal that I would describe more as environmental variables (like setting the "temperature" of the lake, or limiting the size of rocks people are allowed to throw).
They are also doing everything at a pretty high level where you don't need to be able to predict economic events with 100% accuracy. You can know that throwing a 50lb rock in the lake will likely cause a bigger wave to come up on shore (regardless of other rocks being thrown) without being able to fully characterize and predict the timing of it.
5-year plans from centralized sources seem to struggle to even survive for 5 years, whereas the current system in the US has been generally functioning well for over 100. I'm not convinced they're as similar as you think.
- wolframhempel 4y agoI think that the Fed has significantly extended its scope over time. From a pure backstop for banks towards quantitative easing and even buying of corporate bonds. And that's true for the EZB and other central banks as well. Overall, central banks do indeed seem to have a dampening effect on the economy, preventing some of the more extreme swings of the pre-Fed era, but I would argue that the Feds sustained injection of cash into the markets over the last decade has created a lot of the inflation the Fed is now trying to solve