FOMC Chair Powell answers a reporter’s question at the March 3, 2020 press conference. Photo courtesy of the Federal Reserve.
We’ve officially jumped the shark with respect to monetary policy.
Joe Biden wants to amend the Federal Reserve Act to push Powell & Co., to use monetary and regulatory policies to fight for racial economic equality.
The Fed, as originally envisioned had one goal, and that goal was to be the lender of last resort in a panic.
Today’s Fed is viewed as the white-knight for every financial, economic, health, and apparently social problem in America.
Recession? The Fed can fix it.
Did you borrow too much? The Fed can fix it.
Pandemic? The Fed can fix it.
Racism? Let’s see what the Fed can do.
You need your car repaired? Why not call the Fed?!?!
So much for free-market capitalism, let alone common sense. Using the monetary authority to achieve political goals is how currencies end. The trend here is truly disturbing. If you don’t own gold yet, consider this your invitation.
Bloomberg has more on Biden’s half-baked plan to amend the Federal Reserve act.
Joe Biden proposed a series of steps Tuesday designed to bridge racial economic gaps in the U.S. and promised he would work toward a more diverse Federal Reserve Board that would help minorities access funds and economic development.
Biden called for an amendment to the Federal Reserve Act that would require the Fed to report on racial economic gaps and what policies the Fed is implementing to close these gaps.
“We’re going to strengthen the Federal Reserve’s focus on racial economic equity,” Biden said in a speech in Wilmington, Delaware. He said the Fed’s existing mandate promotes maximum employment and stable prices and “should add to that responsibility, and aggressively target persistent racial gaps in jobs, wages and wealth.”
The campaign later said Biden has not explicitly embraced a third mandate for the Fed dictating that it consider racial justice in its policies, but that seeking one in the future is an option.
In a policy statement released ahead of the speech, Biden’s campaign said he also backs the Fed’s previously announced shift toward a real-time payment system, which would make it possible for low-income people to have instant access to the money they are owed.
A Biden aide said that diversity would be an important factor in all his administration’s personnel decisions, which would include nominating members of the Federal Reserve Board of Governors and, eventually, a board chair.
All of the current governors are White. There are currently two vacancies on the seven-member board. President Donald Trump’s nominees to fill those positions have been awaiting confirmation in the Senate.
“We need to make bold, practical investments to recover from the economic mess we’re in, and to rebuild for the economic future our country deserves,” Biden said.
The racial equity plank not only rounds out his economic plan, but serves to address voters’ attention on the economic gap between African-Americans and Whites that was heightened by the economic crash, the virus pandemic and the protests against police brutality.
Read more here.
