3 ms·

> From my naive perspective, it seems like a lot of meddling, and it isn't clear if such frequent changes are required The federal reserve has exactly 2 mandat

> From my naive perspective, it seems like a lot of meddling, and it isn't clear if such frequent changes are required The federal reserve has exactly 2 mandates: keep prices stable (which they define as a long term inflation of 2%) and reduce unemployment. Unemployment is low, inflation has been far beyond 2%, so the goal is obvious. There’s a technical questions of “how many rate hikes” and “how steep per hike”. But the direction that the federal reserve has been moving is more or less directly implied by their mandate. > If they are required, I suppose that bothers me just as much since it implies a fragile economic system. I’m not sure I agree. On what basis does this imply a fragile economic system? The federal reserve has a tool to achieve their goals, and they are using that tool.

bmitc 4y ago
> Unemployment is low, inflation has been far beyond 2%, so the goal is obvious. But isn’t the current inflation because they printed money out of thin air for nearly two years to push markets well beyond all times highs? Their methods feel more akin to filling up a dam’s holes with bubble gum rather than something more foundational. It seems like a lot of rubber banding. In my experience on the ground, all they’ve done is destabilize investments, prices, and inflation.
- helen___keller 4y ago
  > But isn’t the current inflation because they printed money out of thin air for nearly two years to push markets well beyond all times highs? Essentially yes (although some amount of that is out of feds scope - see federal stimulus and PPP, decided by the legislative branch). At the beginning of the pandemic inflation was low (the fear was deflation) and unemployment was at extreme highs. > It seems like a lot of rubber banding. You aren’t wrong but the pandemic was a black swan event and society’s response to the pandemic was unprecedented (basically shutting down economic activity, some economic sectors like office real estate fundamentally altered to this day). I don’t think there was an easy way out and, all things considered, my opinion is the federal reserve (and lawmakers) did a pretty good job of keeping our economy from imploding. Let’s put it another way: the federal reserve is a control system, and that control system was pushed to the boundaries. Any good control system is going to get some rubber banding to recover from this scenario. The risk of runaway unemployment/deflation was too great in 2020, the risk of runaway inflation is too great now.

bmitc 4y ago

> Unemployment is low, inflation has been far beyond 2%, so the goal is obvious. But isn’t the current inflation because they printed money out of thin air for nearly two years to push markets well beyond all times highs? Their methods feel more akin to filling up a dam’s holes with bubble gum rather than something more foundational. It seems like a lot of rubber banding. In my experience on the ground, all they’ve done is destabilize investments, prices, and inflation.

helen___keller 4y ago
> But isn’t the current inflation because they printed money out of thin air for nearly two years to push markets well beyond all times highs? Essentially yes (although some amount of that is out of feds scope - see federal stimulus and PPP, decided by the legislative branch). At the beginning of the pandemic inflation was low (the fear was deflation) and unemployment was at extreme highs. > It seems like a lot of rubber banding. You aren’t wrong but the pandemic was a black swan event and society’s response to the pandemic was unprecedented (basically shutting down economic activity, some economic sectors like office real estate fundamentally altered to this day). I don’t think there was an easy way out and, all things considered, my opinion is the federal reserve (and lawmakers) did a pretty good job of keeping our economy from imploding. Let’s put it another way: the federal reserve is a control system, and that control system was pushed to the boundaries. Any good control system is going to get some rubber banding to recover from this scenario. The risk of runaway unemployment/deflation was too great in 2020, the risk of runaway inflation is too great now.