George Will has been on a Federal Reserve kick. And it seems rather timely for our purposes. Will is greatly concerned (as noted in a previous post) that the Fed is arrogating too much responsibility for the country's economic management.
To buttress his point, he has drawn in recent columns on several conversations with several presidents of regional Federal Reserve banks (of which there are 12 around the country). Will makes the case that the Fed's primary emphasis should be on "price stability — preserving the currency as a store of value by tightly controlling inflation". But the Fed's recent actions suggest the other half of it's "dual mandate": maximizing employment. This is really another way of saying George Will and many "hawkish" Fed leaders would like to insist that interest rates be raised as needed, and certainly not kept near zero for so long that inflation rears its ugly head.
It should be noted that this has been a minority position inside the Fed in recent years. The presidents of the Dallas and St. Louis Federal Reserve banks have lost out to the majority that say interest rates should be low until employment recovers and/or at least until there is some concrete sign of consumer inflation (for price in items other than volatile commodities like oil and some food prices).
It should also be recalled that many people nowadays would echo with a sentiment I linked to in a previous post that runs against Will's logic. Will believes economic management is fundamentally the responsibility of Congress, not a bunch of technocrats at the Fed. (Though Will certainly does want to the Fed to behave technocratically in the way he defines, by keeping prices stable.) Others, like Senator Chuck Schumer referred to in Will's piece, would say the Fed has to act, because "Congress is lame".
You make your own call.
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