A Quote by Stanley Druckenmiller
Once an economy reaches a certain level of acceleration... the Fed is no longer with you... The Fed, instead of trying to get the economy moving, reverts to acting like the central bankers they are and starts worrying about inflation and things getting too hot.
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During the Greenspan-Bernanke era, the Fed has embraced the view that stability in the economy and stability in prices are mutually consistent. As long as inflation remains at or below its target level, the Fed's modus operandi is to panic at the sight of real or perceived economic trouble and provide emergency relief.
Central bankers always try to avoid their last big mistake. So every time there's the threat of a contraction in the economy, they'll over stimulate the economy, by printing too much money. The result will be a rising roller coaster of inflation, with each high and low being higher than the preceding one.
The reality is the most important thing that can be done are these permanent changes like to the tax code, reduction of government spending. These are the things that pop up in economy and move it in the right direction, start to make it an economy that is moving because of the money in the private economy. When you think about it, when the Fed is lowering an interest rate, what it's doing is it's creating more liquidity. It's putting more money into the economy. The same thing happens when you reduce the tax except if happens from physical policy.
I think the Fed is not designed to have effective tools to deal with the economy. It should settle for just controlling the money supply. And - if it insists, it can worry about inflation.
It has been said that the Fed's job is to take the punch bowl away just as the party gets going, raising interest rates when the economy is growing too fast and inflation threatens.
Minimum wage law is the 'People's Fed.' Tie minimum wage to money supply. If there is pushback against this idea, then shut down the Fed and its ability to distort the economy, penalizing labor, or make the Fed's distortions available to all businesses and all workers.
And we have a Fed that's doing political things. This Janet Yellen of the Fed. The Fed is doing political - by keeping the interest rates at this level.
Two-thirds of the directors at the New York Fed are hand-picked by the same bankers that the Fed is in charge of regulating.
But clearly an economy that's growing and expanding like this one - and it certainly is doing that with high GDP output, employment numbers strong, capacity utilization strong - that's an environment in which the Fed needs to continually be alert to early signs of inflation.
Although low inflation is generally good, inflation that is too low can pose risks to the economy - especially when the economy is struggling.
In a financial crisis, only the Fed, as the lender of last resort, might stand between our economy and financial catastrophe. We must leave the Fed with the flexibility to provide liquidity in order to stop a financial panic.
The central focus of what we are doing at the Fed is to keep inflation from accelerating - and preferably decelerating.
Bankers themselves govern the Fed to some extent, and then there's the classic revolving door where Fed officials come from and then go back to the financial sector. Fed officials tend to believe that the institution should have a large measure of independence from democratic control, even though in law it is under the ostensible control of Congress.
At the end of the day, inflation has been below 2% for quite a long time, and to me, symmetry means getting somewhere above 2% inflation at some point in my Fed career.
In a mature economy like India's, which is becoming modern and a financially-oriented economy, an independent central bank, responsible central bank, is really central to success.
When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here. A super-state controlled by international bankers and international industrialists acting together to enslave the world for their own pleasure. Every effort has been made by the Fed to conceal its powers but the truth is - The Fed has usurped the government!!
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