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Which I think makes the argument that the Fed might not be the right entity to fight this. Powell literally says in this speech that the Fed needs to weaken la

by slg 4y ago

Which I think makes the argument that the Fed might not be the right entity to fight this. Powell literally says in this speech that the Fed needs to weaken labor market conditions (4th paragraph) to strengthen labor market conditions (3rd paragraph). But if the goal is strong labor market conditions and he already notes "the labor market is particularly strong", what are we all doing here? Congress should probably be the one tasked with addressing supply side issues instead of the Fed because the demand side issues aren't actually a problem that needs solving.

el_benhameen 4y ago
I think the Fed would agree with you. Powell and Yellen before him have indicated that they think fiscal policy is a much better means of addressing some of the issues they’ve tried to deal with via monetary policy, but the Fed can actually act while congress generally refuses to do so (IRA aside).
throwaway894345 4y ago
"Strong labor market" is only part of the Fed's charter. The full mandate is: > so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates
- slg 4y ago
  But those goals are redundant because they all effectively mean keep inflation in check. According to Powell's own argument in the 3rd paragraph in this speech, keeping inflation in check is a goal because "without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all."
  - throwaway894345 4y ago
    I'm not going to argue that these things are completely orthogonal, but as the current inflation crisis illustrates, we can have steep inflation and high labor participation (of course, sustaining that labor participation in the midst of steep inflation is infeasible, but most people aren't economically literate and even professional economists get it wrong with troubling frequency).
adolph 4y ago
> Congress should probably be the one tasked with addressing supply side issues Because the deficient supply of self licking ice cream cones? https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone
- butUhmErm 4y ago

by slg 4y ago

el_benhameen 4y ago

I think the Fed would agree with you. Powell and Yellen before him have indicated that they think fiscal policy is a much better means of addressing some of the issues they’ve tried to deal with via monetary policy, but the Fed can actually act while congress generally refuses to do so (IRA aside).

throwaway894345 4y ago

"Strong labor market" is only part of the Fed's charter. The full mandate is: > so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates

slg 4y ago
But those goals are redundant because they all effectively mean keep inflation in check. According to Powell's own argument in the 3rd paragraph in this speech, keeping inflation in check is a goal because "without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all."
- throwaway894345 4y ago
  I'm not going to argue that these things are completely orthogonal, but as the current inflation crisis illustrates, we can have steep inflation and high labor participation (of course, sustaining that labor participation in the midst of steep inflation is infeasible, but most people aren't economically literate and even professional economists get it wrong with troubling frequency).

adolph 4y ago

> Congress should probably be the one tasked with addressing supply side issues Because the deficient supply of self licking ice cream cones? https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone https://en.wikipedia.org/wiki/Self-licking_ice_cream_cone

butUhmErm 4y ago