US Government Is Beholden To The Fed; And Vice-Versa

US GOVERNMENT IS BEHOLDEN TO THE FED

We hear quite a bit today about the issue of Federal Reserve independence. The crux of the argument usually centers  on monetary policy executed by the Fed versus opinions of politicians and others who want and expect something different, which they believe will provide more favorable results.

President Trump has been ardently vocal in demanding that the Fed be more aggressive in cutting interest rates.  He also wants, and is encouraging, action that would result in a weaker US dollar. He believes that it would be good for American businesses. His reasoning is that a weaker US dollar would make American-made goods more competitive.

Whether or not the President is correct doesn’t matter for purposes of this article. What is important is that there is a wide difference of opinion between the Federal Reserve and its current policies (re: Jerome Powell) as compared to the wishes of the United States government (re: President Trump).

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New Fed Chairman, Same Old Story

President Trump nominated Jerome H. Powell as the new Chairman of the Federal Reserve Bank. Don’t look for much to change. And Janet Yellen’s announcement that she will resign from the board upon Mr. Powell’s induction as board chair is pretty much a non-event.

Where we are today is the culmination of decades of irresponsible financial/fiscal policies and a complete abdication of fundamental economics.

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