In an op-ed in the Wall Street Journal Christian Broda and Stanley Druckenmiller complain about the Fed’s announcement that is wouldn’t raise interest rates for years into the future:
The emergency conditions are behind us. Inflation is already at historical averages. Serious economists soundly rejected price controls 40 years ago. Yet the Fed regularly distorts the most important price of all—long-term interest rates. This behavior is risky, for both the economy at large and the Fed itself.
[…]
With its narrow focus on inflation expectations, the Fed seems to be fighting the last battle. Just because the Fed hasn’t faced big trade-offs in recent decades doesn’t mean trade-offs aren’t coming or that they no longer exist. Chairman Jerome Powell needs to recognize the likelihood of future political pressures on the Fed and stop enabling fiscal and market excesses. The long-term risks from asset bubbles and fiscal dominance dwarf the short-term risk of putting the brakes on a booming economy in 2022.
or, as the title of this post suggests, maybe the Fed governors aren’t as independent of political influence as they like to pretend they are.
I believe Drunkenmiller is wrong that the Fed is narrowly focused on inflation expectations.
In fact it is the opposite; the Fed is stating their triggering condition will not be inflation expectations as in the last 30 years but actual inflation. The Fed also stated the goal is no longer a peak inflation of 2% but an average inflation of 2%.
A better critique would be:
(1) The Fed’s reliance on CPI and PCE to measure inflation is skipping over a form of inflation; asset inflation. Asset inflation is pernicious in its own way. The rejoinder would be this is nothing new — the Fed has been ignoring (or trying to create) asset bubbles for 30 years now.
(2) CPI / PCE inflation is a lagging indicator. Average inflation even more so. Making policy decisions on lagging indicators could generate pro-cyclical policy.
As a reminder, Biden gets to pick the next Fed chair at the end of the year.
In 2014 gain in function virus research was shut down in the US. Well, it went to China due to Fauci. And now, through an intermediary, we find it was authorized and funded by Faucis organization. Fauci, in Clintonian doublespeak, denies all. I told you all a year ago he was a fraud and crook.
Oh, is this off topic? Why yes it is. Who will speak? Who will stand up to the bullshit? This is criminality.
The gain of function research is bad enough on its own but what really galls me is the notion that NIH can do an end run around bans in the U. S. by funding research in other countries. I would fire a subordinate of mine who did such a thing.
I would think the Supreme Court would find such a move unconstitutional. My guess is that the Congress would need to bring the suit to have any standing.
More charitable than I, as always. I’d prosecute Fauci.
He still lies through his teeth, and the media are either too stupid or too duplicitous to make it an issue Congress (except for Rand Paul) will take up.
Looks like the US restarted gain in function study funding in 2017. No clear reason given other than that since the moratorium started in 2014 when Obama was POTUS it needed to be overturned. Should probably prosecute the guy in charge of the government who put this back in place.
https://www.nature.com/articles/d41586-017-08837-7