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"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, an
by 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 agoBut 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 agoI'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).