The Fed has failed.
Indeed, only the world-historical disaster engineered by the nincompoops at the European Central Bank has made America's central bank — the Federal Reserve — look remotely good lately.
For eight straight years, under Republican and Democratic leadership, the Fed has behaved like nothing has changed since the 1970s — that inflation is the number one concern, that a return to normal economic conditions is always right around the corner, and that no real changes or innovations are needed. It's a picture of an institution helplessly in the grip of groupthink and intellectual decadence. The Fed remains stubbornly oblivious to clear reality: We are now eight years into a prolonged mini-depression that has only just barely reached a state that might be called "decent" with a straight face. But there is no sign of returning to the pre-recession growth path, and no sign that late-'90s-style mass prosperity is ever coming back.
The Fed is supposed to control the economy via the supply of credit. If the economy is overheating, with spending overtaking production of goods and services, hence leading to inflation, the Fed jacks up interest rates, which makes it harder to borrow money. If the economy is heading into a recession, the Fed can make it easier to borrow (thus stimulating the economy) with lower interest rates.
Interest rates can only go so low — a fact the Fed ran into in 2008. At zero percent interest (or a bit below that), it's impossible to go any lower.
But sometimes zero is not enough. And so the Fed has halfheartedly tried various unconventional stimulus measures to assist the broader economy.
http://www.theweek.com/articles/645903/federal-reserve-living-fantasyland
Indeed, only the world-historical disaster engineered by the nincompoops at the European Central Bank has made America's central bank — the Federal Reserve — look remotely good lately.
For eight straight years, under Republican and Democratic leadership, the Fed has behaved like nothing has changed since the 1970s — that inflation is the number one concern, that a return to normal economic conditions is always right around the corner, and that no real changes or innovations are needed. It's a picture of an institution helplessly in the grip of groupthink and intellectual decadence. The Fed remains stubbornly oblivious to clear reality: We are now eight years into a prolonged mini-depression that has only just barely reached a state that might be called "decent" with a straight face. But there is no sign of returning to the pre-recession growth path, and no sign that late-'90s-style mass prosperity is ever coming back.
The Fed is supposed to control the economy via the supply of credit. If the economy is overheating, with spending overtaking production of goods and services, hence leading to inflation, the Fed jacks up interest rates, which makes it harder to borrow money. If the economy is heading into a recession, the Fed can make it easier to borrow (thus stimulating the economy) with lower interest rates.
Interest rates can only go so low — a fact the Fed ran into in 2008. At zero percent interest (or a bit below that), it's impossible to go any lower.
But sometimes zero is not enough. And so the Fed has halfheartedly tried various unconventional stimulus measures to assist the broader economy.
http://www.theweek.com/articles/645903/federal-reserve-living-fantasyland
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