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Indeed, the Fed often seems like a Pavlov's dog, salivating at the sound of "inflation" and hastily raising interest rates. But as we all know, not every econom

Indeed, the Fed often seems like a Pavlov's dog, salivating at the sound of "inflation" and hastily raising interest rates. But as we all know, not every economic hiccup can be cured with the same medicine. Sometimes, it's more prudent to pass the baton to the government and let them address the root causes, rather than reflexively resorting to the same old monetary tricks.

dragontamer 3y ago
> salivating at the sound of "inflation" and hastily raising interest rates Please name the times in the last 30 years where the Fed has hastily raised interest rates. Lemme help you out: https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS The majority of the Fed's actions has been to drop interest rates. > rather than reflexively resorting to the same old monetary tricks. The Fed can _only_ do monetary tricks. That's all they're authorized to do.
- varispeed 3y ago
  Here is a better graph (although it does not contain recent data): https://www.gzeromedia.com/the-graphic-truth-50-years-of-us-inflation-vs-interest-rates https://www.gzeromedia.com/the-graphic-truth-50-years-of-us-... > The Fed can _only_ do monetary tricks. That's all they're authorized to do. When you only have a hammer, everything starts looking like a nail. Not everything can be solved by monetary tricks, but it seems like they just have to do something for the sake of it, regardless if that means tanking the economy. But hey, once economy dies, there will be no inflation! Genius.
  - dragontamer 3y ago
    Your graph shows declining interest rates as well? You're not posting very much evidence that the Fed often raises interest rates. Your graph clearly shows the 15%, 17%+ federal funds rate of the 1970s, and the 5% we're at today, and the 0% we spent the last decade at. The error is clearly that we've overcorrected and dropped rates too low.
    - varispeed 3y ago
      More like it acts like a Pavlov's dog.
      - dragontamer 3y ago
        I'm well aware of what psychological conditioning is. But the data you posted does not support your claim.
dragonwriter 3y ago
> Sometimes, it's more prudent to pass the baton to the government and let them address the root causes, rather than reflexively resorting to the same old monetary tricks. That’s not the Fed’s choice. The Fed has a mandate to target specific outcomes with a narrow set of monetary policy tools, acting within the existing fiscal framework. Congress can make whatever fiscal interventions it chooses, whenever it chooses; the Fed doesn’t pass the baton to Congress when it feels monetary policy is inadequate, Congress passes it to the Fed by inadequate fiscal policy to acheive the goals Congress mandates the Fed to intervene to correct towards. If you think a situation calls for a fiscal response that osn’t happening, you shouldn’y blame the Fed for not passing the baton, you should blame Congress for not acting. Congress isn't subordinate to the Fed.

dragontamer 3y ago

> salivating at the sound of "inflation" and hastily raising interest rates Please name the times in the last 30 years where the Fed has hastily raised interest rates. Lemme help you out: https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS The majority of the Fed's actions has been to drop interest rates. > rather than reflexively resorting to the same old monetary tricks. The Fed can _only_ do monetary tricks. That's all they're authorized to do.

varispeed 3y ago
Here is a better graph (although it does not contain recent data): https://www.gzeromedia.com/the-graphic-truth-50-years-of-us-inflation-vs-interest-rates https://www.gzeromedia.com/the-graphic-truth-50-years-of-us-... > The Fed can _only_ do monetary tricks. That's all they're authorized to do. When you only have a hammer, everything starts looking like a nail. Not everything can be solved by monetary tricks, but it seems like they just have to do something for the sake of it, regardless if that means tanking the economy. But hey, once economy dies, there will be no inflation! Genius.
- dragontamer 3y ago
  Your graph shows declining interest rates as well? You're not posting very much evidence that the Fed often raises interest rates. Your graph clearly shows the 15%, 17%+ federal funds rate of the 1970s, and the 5% we're at today, and the 0% we spent the last decade at. The error is clearly that we've overcorrected and dropped rates too low.
  - varispeed 3y ago
    More like it acts like a Pavlov's dog.
    - dragontamer 3y ago
      I'm well aware of what psychological conditioning is. But the data you posted does not support your claim.

dragonwriter 3y ago

> Sometimes, it's more prudent to pass the baton to the government and let them address the root causes, rather than reflexively resorting to the same old monetary tricks. That’s not the Fed’s choice. The Fed has a mandate to target specific outcomes with a narrow set of monetary policy tools, acting within the existing fiscal framework. Congress can make whatever fiscal interventions it chooses, whenever it chooses; the Fed doesn’t pass the baton to Congress when it feels monetary policy is inadequate, Congress passes it to the Fed by inadequate fiscal policy to acheive the goals Congress mandates the Fed to intervene to correct towards. If you think a situation calls for a fiscal response that osn’t happening, you shouldn’y blame the Fed for not passing the baton, you should blame Congress for not acting. Congress isn't subordinate to the Fed.