The one silver lining in the nomination of political hack Steve Moore to the Federal Reserve is that it might spur a productive discussion on the benefits (or lack of them) of monetary policy as an instrument of economic growth. This is principally because it’s just one ingredient for what is necessary to instill economic growth, and not a particularly good one at that. A more direct approach is via appropriately targeted and sufficiently large fiscal actions. In regard to monetary policy, low interest rates kept in place for a long time can actually constrain economic growth unless they are coupled with sensible compensating fiscal policy, due to the adverse income impact to savers emanating from a resultant lower income stream. There is also a problem of political legitimacy when so little of the funding is explicitly approved by Congress, and is left instead to the discretion/creation of the Federal Reserve (which has historically tended to prioritize the narrow interests of finance over the rest of the economy). And Steve Moore, a leading advocate of cutting rates to promote additional economic growth (even as he has historically championed spending cuts), will simply perpetuate the (unfortunately) widely held notion of monetary… Read full this story
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The media endlessly talks about interest rates—are they an effective economic tool at this point? have 324 words, post on www.salon.com at April 5, 2019. This is cached page on CuBird. If you want remove this page, please contact us.