The Federal Reserve’s mission is to control inflation and encourage full employment, while at the same time maintaining the strength of the dollar. But, in the last few years progressive politicians and even some members of the Federal Reserve board have encouraged the central bank to take on more roles promoting social justice. As inflation heats up, former Treasury Secretary Larry Summers has slammed the Fed for its focus on being “woke,” as its core mission is failing. Fox Business’s Megan Henney reports:
Former Treasury Secretary Larry Summers on Wednesday excoriated Federal Reserve policymakers for paying too much attention to social issues rather than a pandemic-induced inflation surge that’s triggered wild increases in many consumer prices.
“We have a generation of central bankers who are defining themselves by their ‘wokeness,’” Summers said Wednesday while speaking to a virtual conference organized by the Institute of International Finance. “They’re defining themselves by how socially concerned they are.”
His comments were first reported by Bloomberg News.
Summers likened arguments made by Fed officials downplaying inflation concerns to those made by former Fed chairs Arthur Burns and G. William Miller, who led the U.S. central bank in the 1970s when the U.S. saw some of the highest inflation rates in decades.
“We’re in more danger than we’ve been during my career of losing control of inflation in the U.S.,” Summers, a Harvard University professor, said. “We’ve gone even further towards losing it in Britain and I think we’re at some risk in Europe.”
The Fed adopted a new strategy last summer in which it will keep the benchmark federal funds rate near zero, even if inflation rises above the preferred rate, in order to reach maximum employment. But over the past couple of months, inflation has been rising at the fastest pace in more than a decade and is well above the Fed’s preferred target of 2%. There are still about 7.7 million unemployed Americans.
Central bankers have also increasingly been discussing the economic impact of climate change and how to incorporate that into their work.
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