Do they not get it or do they think we all failed grade-school arithmetic?
Ben S. Bernanke argued for 15 years that the Federal Reserve should announce a numerical inflation target. When he finally got his way in January, the victory allowed the central bank to elevate its other mandate: full employment.
Bernanke’s shift to emphasizing employment goals is one of the hallmarks in a grueling two-term chairmanship that spanned the worst financial crisis and recession since the Great Depression and a slow labor-market recovery that pinned joblessness above 8 percent for 43 months. The presidential campaign has put the Fed in transition as Republican candidate Mitt Romney said he’d replace Bernanke, though former colleagues doubt he will stay on, no matter who wins.
And on both counts the “mandate” has been failed.
Intentionally so, I might add.
The Fed Mandate is for stable prices, not 2% inflation. Need I remind everyone that a 2% inflation target, if met over a 45 year working life (age 20 – 65) results in a price increase of 144%?
Of course the actual performance of The Fed historically is closer to 3% inflation. That’s a 278% inflation over the same 45 years.
Put another way if you earned $1 in purchasing power at age 20 and saved that dollar, you have about 35 cents left at age 65.
And this is Bernanke’s intent.
Innovation and job creation require capital formation. Capital formation is, simply put, savings.
Lacker finishes with:
“I don’t think the expectation the public and the political system has for regulators’ and supervisors’ responsibilities is reasonable,” Lacker said in an interview. “We have been set up again to be scapegoats the next time something goes wrong,” and when something “blows up, somebody will want us to step in.”
What’s reasonable is that when you intentionally violate a black-letter legal requirement for 100 serial years, making excuses the entire time and attempting to pat yourself on the back for having done so, is that you and your cohorts swing from at least a political set of lampposts.
But that would require that Congress not have every interest congruent with maintaining your scam and actually be representative of the best interest of the people, which, of course, it does not.