As we prepare for the USMidterms, I’m thinking more about #2024 & what I’d advise the next US president. The one key area I would tell her/him, get rid of as many current Federal Reserve leaders as possible starting with Chairman Jay Powell.
The 8/27/2020 change of policy focus was akin to Germany’s removing nuclear & coal fired plants. Now, Germany must restart the coal plants as they became dependent on Russia for energy. Similar well-intentioned actions on US monetary policy brought about the stratospheric inflation we have today. The Fed’s “inclusive employment” change kept stimulus going and forced them to take their focus off inflation with disastrous results for the very people they thought they were helping.
Higher food, energy and transportation costs disproportionately impact low and middle income earners as they spend more of their disposable income on these three versus high income earners.
Monetary policy is not social policy. Fiscal policy is social policy. Confusing these is the problem.
#Fed needs new leadership who take their finger out of the wind and put it squarely back on the economy. Financial markets will remain unstable until the central bank’s credibility is reestablished.