Financial Times/Brendan Greeley/11-04-2022
“Monetary policymakers have been saying this for so long that we have allowed them to launder it into a kind of privilege. They do not have to adapt. They do not have to be creative. Their tools do not have to work. Central bankers remain forever in lag. It is not working now — but it could.”
USAGOLD note 1: Greeley says today’s Fed is still Ben Bernanke’s and it is difficult to quarrel with that assessment. In terms of policy, we do not see the Fed’s current approach as anywhere near what Friedman might have instituted. Then again, we have always seen monetarism as a disciplined approach. Bernanke, on the other hand, was more attuned to saving the banking system and financial markets no matter the consequences – a total lack of discipline featuring a money printing binge that carried into the Yellen and Powell tenures.
USAGOLD note 2: That said, Greeley’s point about hiding behind the lag between policy and effect is well-taken. The Fed, he says, is “pulling up and down on a lever that isn’t attached to anything, hoping it gets lucky.”
