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Most people in monetary policy circles (and virtually everyone with a role in setting monetary policy) think of the money supply as a parameter that can be adju
by SpicyLemonZest 4y ago
Most people in monetary policy circles (and virtually everyone with a role in setting monetary policy) think of the money supply as a parameter that can be adjusted pretty freely rather than a fixed resource you need to be careful with. To them, pointing to the money supply as a cause of inflation is like pointing to the water supply as a cause of why your house is flooded. It's not false, but it doesn't mean that you should eliminate your flood risk by tearing the pipes out of your walls and satisfying all your water needs with buckets from the local well.
- NickC25 4y agoUnfortunately there's a political element to it (because the Fed is not actually independent in the truest sense - they have to walk political tightropes just like every other official in Washington) and that's where things get messy. The problem is - how do you improve this system while taking into consideration the real-world effects of Fed policy?