Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Foundations of Economics
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

The Fed HAS Failed

% of readers think this story is Fact. Add your two cents.


When we fail to achieve our goals, it is human nature for us to try to make ourselves feel better by comparing ourselves to someone who has failed even worse. I thought of this when I saw yesterday’s Chart of the Day at Business Insider. Fed apologist Joe Weisenthal uses the chart below to argue that it is the Bank of Japan that really has failed since 1995.

Weisenthal notes that the Bank of japan has had a much harder time hitting its inflation target of 1% than the Fed has of hitting its target of 2%. The Fed is relatively much more capable and credible. QED.

I would argue, however, that to measure an institution’s effectiveness, one should not compare its performance to someone else, but rather should examine whether it has fulfilled its stated purpose. The Employment Act of 1946 stated that the official economic policy of the United States Government was “to promote maximum employment, production, and purchasing power.” This general directive was explicitly applied to the Fed by the The Federal Reserve Reform Act of 1977 which identified price stability as a monetary policy goal. The following year, the Full Employment and Balanced Growth Act was approved and established full employment as a second goal of monetary policy.

Let’s see how well the Fed has fulfilled its mandate. The chart below shows what has happened to the Consumer Price Index since the Fed’s inception.

So how well has the Fed maintained price stability during its almost 100-year tenure? Not so well. The dollar has lost over 95% of its purchasing power since the advent of the FED. The increase in prices has been especially steep since leaving the last gasp of the international gold standard. The chart below shows what has happened to consumer prices since August of 1971 when Nixon closed the Gold window:

It is almost a continual climb upward. The performance for the period after August 1971 is very important, because once the international gold standard was abandoned, the only constraint on monetary policy was the Fed itself. It is one thing for the Fed to keep prices relatively stable when it knew that profligacy meant significant gold drain. Indeed even that threat proved too weak by the late 1960s, which prompted Nixon to abandon our obligations and cut the dollar free from gold. It is easy to see how successfully the Fed has stabilized prices since then.

The Fed clearly has failed in its mandate to maintain price stability. What about employment? It turns out that the unemployment rate has been wildly erratic since 1948, the farthest back unemployment data goes at FRED, the St. Louis Federal Reserve Data Base.

This is not a picture of stability. Instead the track record is one of repeated economic cycles which manifest significant unemployment.

Not withstanding the claims of Joe Weisenthal, the clear conclusion is that the Fed is  a failure. It clearly has not fulfilled its mandate. Sound monetary theory and business cycle theory teaches that the Federal Reserve has failed because it has caused price inflation, a massive shrinkage of the purchasing power of the dollar and the business cycle.

Read more at Foundations of Economics


Source:


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Humic & Fulvic Liquid Trace Mineral Complex

HerbAnomic’s Humic and Fulvic Liquid Trace Mineral Complex is a revolutionary New Humic and Fulvic Acid Complex designed to support your body at the cellular level. Our product has been thoroughly tested by an ISO/IEC Certified Lab for toxins and Heavy metals as well as for trace mineral content. We KNOW we have NO lead, arsenic, mercury, aluminum etc. in our Formula. This Humic & Fulvic Liquid Trace Mineral complex has high trace levels of naturally occurring Humic and Fulvic Acids as well as high trace levels of Zinc, Iron, Magnesium, Molybdenum, Potassium and more. There is a wide range of up to 70 trace minerals which occur naturally in our Complex at varying levels. We Choose to list the 8 substances which occur in higher trace levels on our supplement panel. We don’t claim a high number of minerals as other Humic and Fulvic Supplements do and leave you to guess which elements you’ll be getting. Order Your Humic Fulvic for Your Family by Clicking on this Link , or the Banner Below.



Our Formula is an exceptional value compared to other Humic Fulvic Minerals because...


It’s OXYGENATED

It Always Tests at 9.5+ pH

Preservative and Chemical Free

Allergen Free

Comes From a Pure, Unpolluted, Organic Source

Is an Excellent Source for Trace Minerals

Is From Whole, Prehisoric Plant Based Origin Material With Ionic Minerals and Constituents

Highly Conductive/Full of Extra Electrons

Is a Full Spectrum Complex


Our Humic and Fulvic Liquid Trace Mineral Complex has Minerals, Amino Acids, Poly Electrolytes, Phytochemicals, Polyphenols, Bioflavonoids and Trace Vitamins included with the Humic and Fulvic Acid. Our Source material is high in these constituents, where other manufacturers use inferior materials.


Try Our Humic and Fulvic Liquid Trace Mineral Complex today. Order Yours Today by Following This Link.

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    Total 1 comment
    • Anonymous

      The Rothschilds, world kingpins, worth $500 trillion! They own Reuters, AP,

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.