President Donald J. Trump has taken on the Federal Reserve, saying that Fed chairman Jerome H. Powell is threatening US economic growth by further raising interest rates.
What about the influence from 'special interest groups' such as the banking industry on Fed policymaking? There should hardly be any doubt that the Fed caters, first and foremost, to the needs of commercial and investment banks.
Especially so as the Fed sets the interest rate for bank credit, and in doing so basically controls all interest rates in credit markets.
If incoming data suggests that the economy is returning to growth, the Fed starts raising the interest rate and keeps raising it until the interest rate becomes 'too high', turning the boom into yet another bust.
Forcing the Fed to keep interest rates at artificially lowered levels for longer does not solve the real problem.
In other words: The truth is that Fed policy is not the solution to the problem, it is the most significant part of the problem.
If shutting down the Fed right away is not an option, one path that is open to the president is to end the Fed's money monopoly.
https://mises.org/wire/trump-right-fed-big-problem
What about the influence from 'special interest groups' such as the banking industry on Fed policymaking? There should hardly be any doubt that the Fed caters, first and foremost, to the needs of commercial and investment banks.
Especially so as the Fed sets the interest rate for bank credit, and in doing so basically controls all interest rates in credit markets.
If incoming data suggests that the economy is returning to growth, the Fed starts raising the interest rate and keeps raising it until the interest rate becomes 'too high', turning the boom into yet another bust.
Forcing the Fed to keep interest rates at artificially lowered levels for longer does not solve the real problem.
In other words: The truth is that Fed policy is not the solution to the problem, it is the most significant part of the problem.
If shutting down the Fed right away is not an option, one path that is open to the president is to end the Fed's money monopoly.
https://mises.org/wire/trump-right-fed-big-problem
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