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The Fed is a tool for managing inflation and monetary supply and it does its best with that tool to sustain job creation and the economy in general. The real p

The Fed is a tool for managing inflation and monetary supply and it does its best with that tool to sustain job creation and the economy in general. The real problem is the US's structural problems have become a systemic cancer that is choking off growth: 1) We have a tax code that incentives capital when capital isn't an economic constraint. We are demand constrained as far as I can tell, which means more people need to have an income to spend it. 2) We have a fundamentally broken political system that incentives things like invading other countries, the war on drugs, and a bunch of destructive spending over constructive spending on things like infrastructure that would act as an economic multiplier. The net result is we basically need to equalize taxes on Labor v. Capital and shift the income into reducing taxes on the poorest people in the country who also pay taxes + infrastructure spending. It really is the only solution I can see that is truly going to fix anything. Tbh, I'd settle for the taxation equalization with all of the gain on the Capital side going to the poorest income earners. That might be politically viable without the Republicans fighting it [after all, they are reducing taxes for everyone and only raising them on capital]. [e.g. Raise capital gains, raise the standard deduction for everyone] I don't really see this happening while the US still frequently has good years. It is going to happen when we get hit with another great recession or other calamity.

aliston 12y ago
In principle, this is what the Fed should be. But, in 1977 the Fed became tasked with managing "maximum employment, stable prices and moderate long-term interest rates." This is one of the fundamental problems with the Fed's dual mandate -- its conceivable that those levers may be at odds with one-another.
- opendais 12y ago
  Fair enough, I was focusing more on the fact the problem with the Fed isn't the Fed. The Fed is doing its job as best as any human can really expect it to function. The problem is Congress+Presidents repeatedly passing the buck and pandering, rather than being productive.

aliston 12y ago

In principle, this is what the Fed should be. But, in 1977 the Fed became tasked with managing "maximum employment, stable prices and moderate long-term interest rates." This is one of the fundamental problems with the Fed's dual mandate -- its conceivable that those levers may be at odds with one-another.

opendais 12y ago
Fair enough, I was focusing more on the fact the problem with the Fed isn't the Fed. The Fed is doing its job as best as any human can really expect it to function. The problem is Congress+Presidents repeatedly passing the buck and pandering, rather than being productive.