4 ms·

I think you are right to criticize chiefalchemist, the comment is more snark than substance. The argument, as far as I understand it, is that if the Fed knew/b

I think you are right to criticize chiefalchemist, the comment is more snark than substance. The argument, as far as I understand it, is that if the Fed knew/believed in the arguments in the linked article, they would or should have acted differently over the last 10 years. The argument falls apart because no reason is given for the Fed acting differently. The Fed does not have a mandate to maintain corporate profitability nor does it set tax rates. They are surely aware that their actions have impacts on corporations, and they surely do consider this, but their mandate is clear: The Federal Reserve Act mandates that the Federal Reserve conduct monetary policy "so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." https://www.federalreserve.gov/monetarypolicy/monetary-policy-what-are-its-goals-how-does-it-work.htm https://www.federalreserve.gov/monetarypolicy/monetary-polic...

chiefalchemist 4y ago
What the mandate is and what is actually happening are not synonymous. Congress is also supposed to oversee The Fed and how often does that happen? Referencing theory is fine. But not as a substitute for reality. It's important we see and discuss reality.
chiefalchemist 4y ago
The Fed has A LOT of power and influence both in the direct impact of its actions, as well as the leadership and "culture" it establishes among its group-think peers. You're naive to think otherwise. Why are you making excuses for them? Instead of holding them to the higher standard they claim to be.?
skippyboxedhero 4y ago
All of the things mentioned in the article impact the Fed's mandate. It is like saying that the GFC didn't impact the Fed's mandate...but, ofc, we know it did because they cut rates to zero and gave hundreds of billions out. Funny how that works: the Fed has no responsibility when stock prices go up, but when they go down...immediate action. And 2008 happened, in part, because of the cut to 1% in 03-04 (no-one understand this today, synthetic CDO issuance pre that cut cycle was non-existent and suddenly went to tens of billions overnight because there was insufficient AAA securities with yields that could fund liabilities). We are just going through the same stuff over and over. These things have very real economic effects, they lead to massive volatility in employment, instability in prices, and have led to financial distortions that undermine basic aspects of how an economy functions (interest rates/the price of money no longer means anything outside of what the govt says it does, the result has been the most epic misallocation of capital in the history of the US economy).

chiefalchemist 4y ago

What the mandate is and what is actually happening are not synonymous. Congress is also supposed to oversee The Fed and how often does that happen? Referencing theory is fine. But not as a substitute for reality. It's important we see and discuss reality.

chiefalchemist 4y ago

The Fed has A LOT of power and influence both in the direct impact of its actions, as well as the leadership and "culture" it establishes among its group-think peers. You're naive to think otherwise. Why are you making excuses for them? Instead of holding them to the higher standard they claim to be.?

skippyboxedhero 4y ago

All of the things mentioned in the article impact the Fed's mandate. It is like saying that the GFC didn't impact the Fed's mandate...but, ofc, we know it did because they cut rates to zero and gave hundreds of billions out. Funny how that works: the Fed has no responsibility when stock prices go up, but when they go down...immediate action. And 2008 happened, in part, because of the cut to 1% in 03-04 (no-one understand this today, synthetic CDO issuance pre that cut cycle was non-existent and suddenly went to tens of billions overnight because there was insufficient AAA securities with yields that could fund liabilities). We are just going through the same stuff over and over. These things have very real economic effects, they lead to massive volatility in employment, instability in prices, and have led to financial distortions that undermine basic aspects of how an economy functions (interest rates/the price of money no longer means anything outside of what the govt says it does, the result has been the most epic misallocation of capital in the history of the US economy).