5/26/22
Andy Kessler wrote one of his typically insightful pieces
for the Wall Street Journal on 5/16/22 and, again, while I generally
agree with his argument, he made a statement regarding the Fed that floored
me. Why the Fed grew so lax in managing
monetary policy is crystal clear, to wit, the Fed has become little more than
an arm of the administration in power.
Perhaps I should have been kinder to my description of the Bernanke, Yellen,
and Powell Feds, but why? This letter
also was not published.
5/16/22
In his 5/16/22 Opinion piece (“When Will the Selling
Stop?”), Andy Kessler states “Why the Fed overstayed its welcome at zero is a
mystery, but rising interest rates have ended the party.”
There is no mystery to the Fed’s having conducted an
expansionary monetary policy long after doing so may have been warranted. Since at least the 2009 “housing” crisis,
the Fed has become little more than an arm of the Administration in power. Bush, Obama, Trump, and Biden all demanded
an expansionary monetary policy to prop up the economy and/or the market and
the Bernanke, Yellen, and Powell Feds responded like the lapdogs they were and
are. Now that inflation is becoming a
problem for the Biden administration, the Fed has begun tightening.
We should end the charade that monetary policy has been
for at least the last thirteen years.
Either Congress should explicitly re-establish the Fed’s independence or
the Fed should be made another Cabinet Department. Heaven help us if we choose the latter.
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