The Real Agenda of the US Federal Reserve

Daniel Gross has a good article looking at Fed Chairman Ben Bernanke in Slate magazine:

If Federal Reserve Chairman Ben Bernanke had a theme song, it would be Meat Loaf's 1978 classic "Two Out of Three Ain't Bad."

The central bank says it has a trio of missions. The Fed "sets the nation's monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates." Long-term interest rates are near record lows, inflation is under control, and prices are stable, but maximum employment remains a far-off dream. In a speech earlier this month, Bernanke noted that "in all likelihood, a significant amount of time will be required to restore the nearly 8-1/2 million jobs that were lost nationwide over 2008 and 2009." In another recent speech in Michigan, he acknowledged that "high unemployment imposes heavy costs on workers and their families, as well as on our society as a whole." But he doesn't seem inclined to do anything about it. The Federal Open Market Committee this week stood pat on monetary policy and announced no additional efforts or initiatives to combat persistent high unemployment.

If Federal Reserve Chairman Ben Bernanke had a theme song, it would be Meat Loaf's 1978 classic "Two Out of Three Ain't Bad."
The central bank says it has a trio of missions. The Fed "sets the nation's monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates." Long-term interest rates are near record lows, inflation is under control, and prices are stable, but maximum employment remains a far-off dream. In a speech earlier this month, Bernanke noted that "in all likelihood, a significant amount of time will be required to restore the nearly 8-1/2 million jobs that were lost nationwide over 2008 and 2009." In another recent speech in Michigan, he acknowledged that "high unemployment imposes heavy costs on workers and their families, as well as on our society as a whole." But he doesn't seem inclined to do anything about it. The Federal Open Market Committee this week stood pat on monetary policy and announced no additional efforts or initiatives to combat persistent high unemployment.

But he's showed no such urgency in grappling with high unemployment. Why?

Go read the whole article to get the answer to this question.

I don't agree with David Gross's conclusions, but I'm sure glad that he has put these plus the more traditional answers (some of which I think explain the behaviour) on the table. People need to think long and hard on why their government officials seem happy to do two-thirds of their job, do the part that keeps Wall Street happy but ignores the needs of "the little people".

Here's the reality of the US Federal Reserve. David Gross nails this:

... expecting this Fed to have a sense of urgency about the unemployment rate may be as futile as looking for a Cadillac at the bottom of a Cracker Jack box.