Richmond Fed president Jeffrey Lacker is allegedly one of the hawks, though that term can’t mean what is used to — not in a world where it takes 8 years to get to .5%–.75% on the Fed Funds Rate target.
Monday, Lacker repeated his position that the Fed is “getting behind the curve.” This puts him sharply at odds with “Dovish” Yellen who in her recent Stanford speech opined the opposite on “getting behind the curve.” Lacker wants a few more minuscule rate increases than Yellen.
What a meaningless disagreement over quarters of a percentage point on a meaningless interest rate. Right under their noses, of course, Fed’s monetary actions over the years have driven financial asset prices skyward, home prices to absurdity, and commodity prices up 40% (even after dropping since 2014). But all they see on the price inflation front is less than 2% on the personal consumption expenditure (PCE) statistic!
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But despite all the faux concern over an “overheating economy,” lies the fact that manufacturing sales have largely plateaued since 2012, industrial production has fallen since 2014, and Obama is the first president since Hoover to not have a single year of over 3% GDP growth.
What a time to be alive. Not only has the Fed successfully stagnated the economy, but we are still getting the same tired talk of a push toward interest rate normalization. With a stagnating economy and rising prices, they used to call this stagflation. Now it is dismissed as “the new normal.”
And indeed this has become the new normal, seemingly. But perhaps instead of conducting the same old tired monetarist/Keynesian econometric experiments, the Fed should take a look in the mirror. We certainly can’t expect a growing economy while the world’s central banks actively undermine our vital pool of funding via fiscal and monetary interventionism.
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Article by C. Jay Engel – Mises.org