Republican backed economists
attack the Fed
A group of prominent Republican-leaning economists, coordinating with Republican lawmakers and political strategists, is launching a campaign this week calling on Fed Chairman Ben Bernanke to drop his plan to buy $600 billion in additional U.S. Treasury bonds.
“The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment,” they say in an open letter to be published as ads this week in The Wall Street Journal and the New York Times.
The Fed, despite frequent criticism from both parties, has enjoyed considerable independence from politicians on monetary policy for the past three decades.
The Fed faces potential pressure of a different sort from the left as well. Some prominent Democratic congressmen, including the current chairman of the House Financial Services Committee, have endorsed the quantitative-easing move.
Signers of the new manifesto criticizing the Fed include: Stanford University economists Michael Boskin, who was chairman of President George H. W. Bush’s Council of Economic Advisers and John Taylor, a monetary-policy scholar who served in both Bush administrations; Kevin Hassett of the conservative American Enterprise Institute; Douglas Holtz-Eakin, former Congressional Budget Office director and adviser to John McCain’s presidential campaign; David Malpass, a former Bear Stearns and Reagan Treasury economist who made an unsuccessful run for a U.S. Senate seat from New York; and William Kristol, editor of the Weekly Standard and a board member of e21, a new conservative think tank seeking a more unified conservative view on economic policy.
To fight a deep recession provoked by a global financial crisis, the Fed has been keeping its target for overnight interest rates near zero since December 2008, and bought $1.7 trillion in U.S. Treasury debt and mortgage securities to push down long-term interest rates, hoping to spur borrowing and spending. That program ended in the spring. With unemployment at 9.6%, well above its mandate of “maximum sustainable employment,” and inflation running under its target of a bit below 2%, the Fed policy committee voted to resume bond-buying to try to move inflation up a bit and unemployment down.
Hm, has anyone else noticed the signers of the manifesto include many former Bush advisers or advisers/consultants for corporation?
If these advisers have their way (very unlikely since the Fed is independent from politicians on monetary policy), America’s economic progress will slide back further.
And these, my human friends, are policies one should stay very far away from, especially if you make less than $1 million dollars a year.
In order to reduce the unemployment rate AND deficit AND spur the economy involves cohesion efforts from the Fed (even tho we martians are also scared of this entity), Congress, AND the American populace (which now includes corporations due to the Citizens United case).
United We Stand, Divided We Fall