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> Given that the entire point of the Federal Reserve is to promote inflation I can't tell if you're being sarcastic, but the Fed has three mandates [1], one of

by nhebb 13y ago

> Given that the entire point of the Federal Reserve is to promote inflation I can't tell if you're being sarcastic, but the Fed has three mandates [1], one of which is to stabilize prices: "maximum employment, stable prices, and moderate long-term interest rates." [1] http://www.law.cornell.edu/uscode/text/12/225a http://www.law.cornell.edu/uscode/text/12/225a

jswinghammer 13y ago
I am not. The real purpose is to inflate the monetary supply for the benefit of the large banks. On those supposed goals they have entirely failed anyway.
jellicle 13y ago
And even a minimal knowledge of history would suggest that the Federal Reserve works very hard to minimize inflation, even at the expense of high unemployment. Poster's statement is along the lines of "Given that the entire point of firefighters is to promote fires". It's nonsense.
- jswinghammer 13y ago
  So much to learn, you still have. A most basic study of the Federal Reserve would lead you to the exact opposite conclusion. They try to keep interest rates as loan as possible until price inflation gets out of control. I spend a lot of time caring about this issue and all the hype about what the Federal Reserve cares about is just that-hype. They want to inflate the monetary supply all day every day and that's why they buy debt every month as part of QE-infinity. That it hasn't worked does not mean that they do not desire inflation but rather that they have no clue as to what they're doing.
  - tokenizer 13y ago
    I'd recommend Peter Schiff or Max Kaiser for an interesting look into the Fed's QE policy minus Mainstream Media hype/ The problem with the FED, and every Keynesian economist is that they think the US will indefinitely be the world currency reserve, and that 5,000 years of gold based monetary policy is less stable than the post war economics that have given us rising inequality, lowering employment, indefinite QE, China calling for a de-Americanized world, and an interest rate ceiling of 1% (look it up, Bernanke said it!) that was the bottom rate of Greenspan. I just love when current economists tell me I'm naive, and that government debt isn't the same a debt debt... Or that there isn't a borrowing limit. The limit, is when other governments stop buying your currency. See China-Australia trading deal, China's ease on buying bonds, and look up an interesting theory on how Japan will soon stop buying US bonds, due to it's self-inflicted inflationary policy, which will force it do invest in it's own money supply soon.
    - mistermann 13y ago
      Recent history would seem to indicate the US can somehow simply buy their own debt. It seems impossible to me but its been working so far.
      - tokenizer 13y ago
        You're right, however things can take a long time to run out of steam. Also, it's very interesting how much of economics relies on everyone believing in the system. I'd recommend checking this video out: http://www.youtube.com/watch?v=BH9YPtk5VB4 http://www.youtube.com/watch?v=BH9YPtk5VB4. This is what many people think. While some can definitely brush it off, many aren't.
      - jayfuerstenberg 13y ago
        Well the US is exporting its debt (counterintuitive as that sounds) overseas by buying goods made abroad. If I recall correctly 40% of US currency is actually outside the country.
    - seoguru 13y ago
      Peter Schiff has been calling for hyper inflation and dollar collapse any day now for at least the last 5 years. Check out this article on mobilization and money: http://neweconomicperspectives.org/2013/08/mobilization-and-money.html http://neweconomicperspectives.org/2013/08/mobilization-and-... no other governments buying our bonds were needed. Nor are they needed now. As for replacing the US dollar with something else as world currency reserve, Mike Norman gives his views: http://www.youtube.com/watch?v=m5fTV4bGO0w http://www.youtube.com/watch?v=m5fTV4bGO0w
  - nhaehnle 13y ago
    Low interest rates is exactly what you want in a normal, non-inflationary environment. It encourages lending for investment into projects that allows a rise in economic activity. The only time you don't want low interest rates is when an excessive amount of loans fuels demand-pull inflation. (Though, interestingly, high interest rates can also fuel inflation via wealth effects. Overall, I tend to think interest rates are the wrong lever, and fiscal policy should be used at all times, but that's a whole other can of issues.) So the behavior is describe is exactly what is reasonable. Now, the whole QE thing is obviously pushing on a string. The zero lower bound means it's not going to help economic activity. QE is like going to a witch doctor because all the people who could really help - in this case, the people in control of fiscal policy - can't get their heads out of their proverbial asses.
nazgulnarsil 13y ago
Stable prices is a euphemism for inflating just enough to keep nominal prices the same even as productivity in the economy dramatically increases.
- NikolaTesla 13y ago
  I would say it's a euphemism for debasing just enough to keep a small minority enriched without the masses discovering it via overt price inflation and/or without the masses outside the US realizing that the value of their goods and services are being debased for the same reason.

by nhebb 13y ago

jswinghammer 13y ago

I am not. The real purpose is to inflate the monetary supply for the benefit of the large banks. On those supposed goals they have entirely failed anyway.

jellicle 13y ago

And even a minimal knowledge of history would suggest that the Federal Reserve works very hard to minimize inflation, even at the expense of high unemployment. Poster's statement is along the lines of "Given that the entire point of firefighters is to promote fires". It's nonsense.

jswinghammer 13y ago
So much to learn, you still have. A most basic study of the Federal Reserve would lead you to the exact opposite conclusion. They try to keep interest rates as loan as possible until price inflation gets out of control. I spend a lot of time caring about this issue and all the hype about what the Federal Reserve cares about is just that-hype. They want to inflate the monetary supply all day every day and that's why they buy debt every month as part of QE-infinity. That it hasn't worked does not mean that they do not desire inflation but rather that they have no clue as to what they're doing.
- tokenizer 13y ago
  I'd recommend Peter Schiff or Max Kaiser for an interesting look into the Fed's QE policy minus Mainstream Media hype/ The problem with the FED, and every Keynesian economist is that they think the US will indefinitely be the world currency reserve, and that 5,000 years of gold based monetary policy is less stable than the post war economics that have given us rising inequality, lowering employment, indefinite QE, China calling for a de-Americanized world, and an interest rate ceiling of 1% (look it up, Bernanke said it!) that was the bottom rate of Greenspan. I just love when current economists tell me I'm naive, and that government debt isn't the same a debt debt... Or that there isn't a borrowing limit. The limit, is when other governments stop buying your currency. See China-Australia trading deal, China's ease on buying bonds, and look up an interesting theory on how Japan will soon stop buying US bonds, due to it's self-inflicted inflationary policy, which will force it do invest in it's own money supply soon.
  - mistermann 13y ago
    Recent history would seem to indicate the US can somehow simply buy their own debt. It seems impossible to me but its been working so far.
    - tokenizer 13y ago
      You're right, however things can take a long time to run out of steam. Also, it's very interesting how much of economics relies on everyone believing in the system. I'd recommend checking this video out: http://www.youtube.com/watch?v=BH9YPtk5VB4 http://www.youtube.com/watch?v=BH9YPtk5VB4. This is what many people think. While some can definitely brush it off, many aren't.
    - jayfuerstenberg 13y ago
      Well the US is exporting its debt (counterintuitive as that sounds) overseas by buying goods made abroad. If I recall correctly 40% of US currency is actually outside the country.
  - seoguru 13y ago
    Peter Schiff has been calling for hyper inflation and dollar collapse any day now for at least the last 5 years. Check out this article on mobilization and money: http://neweconomicperspectives.org/2013/08/mobilization-and-money.html http://neweconomicperspectives.org/2013/08/mobilization-and-... no other governments buying our bonds were needed. Nor are they needed now. As for replacing the US dollar with something else as world currency reserve, Mike Norman gives his views: http://www.youtube.com/watch?v=m5fTV4bGO0w http://www.youtube.com/watch?v=m5fTV4bGO0w
- nhaehnle 13y ago
  Low interest rates is exactly what you want in a normal, non-inflationary environment. It encourages lending for investment into projects that allows a rise in economic activity. The only time you don't want low interest rates is when an excessive amount of loans fuels demand-pull inflation. (Though, interestingly, high interest rates can also fuel inflation via wealth effects. Overall, I tend to think interest rates are the wrong lever, and fiscal policy should be used at all times, but that's a whole other can of issues.) So the behavior is describe is exactly what is reasonable. Now, the whole QE thing is obviously pushing on a string. The zero lower bound means it's not going to help economic activity. QE is like going to a witch doctor because all the people who could really help - in this case, the people in control of fiscal policy - can't get their heads out of their proverbial asses.

nazgulnarsil 13y ago

Stable prices is a euphemism for inflating just enough to keep nominal prices the same even as productivity in the economy dramatically increases.

NikolaTesla 13y ago
I would say it's a euphemism for debasing just enough to keep a small minority enriched without the masses discovering it via overt price inflation and/or without the masses outside the US realizing that the value of their goods and services are being debased for the same reason.