The Blind Describing the View to the Blind

As the whole shenanigans surrounding CYNK last week is emblematic of how broken our capital markets are in the Age of the Fed, so the semi-annual Humphrey-Hawkins testimony on right now is emblematic of how broken America really is.  Aside from the optics of decline and decay when a Senator who has obviously had a stroke, judging by his speech, and is probably unfit to serve, is the first to question the Fed Chairperson Janet Yellen, who then responds in her own stroke indicative voice, or maybe she just has a seriously difficult time getting words out of her mouth for some reason, the Chairwoman also indicates she has a) no clue what she is talking about, and b) completely misunderstands the Feds legislatively mandated role and duties.  How is that for a run-on sentence.  Of course the state of the mandate is an example of how things become perverted and their original purpose lost, much like the meaning of the US Constitution has been perverted and trampled under constant onslaught by idiots mostly of the Left but also of the Right.

She lists the dual mandate in reverse order, first she mentions the mandate of maximizing employment and then the mandate of sound money.  Of course for any self-respecting Fed Governor seeking to engender confidence in the Fed it is and should be the other way around.  Remember the context in which the Humphrey-Hawkins law was passed in the 1970’s.  It was a time of high and rising inflation.  The emerging zeitgeist ws that the Fed would have to crank up rates to combat the inflation.  As an afterthought, in an effort to prevent the Fed from really putting the screws to the economy in the attempt to ring out inflation, Congress put in the second “mandate”, which is to be mindful of the effects of tight policy on employment and the real economy.  Instead, the Fed has now read the employment language as meaning that they have an affirmative duty to craft policies to promote full employment as an affirmative duty, rather than the negative duty it was originally.

I have never been one of these End the Fed types as I heretofore saw the Fed largely in a positive light.  I have since changed my view and I am afraid that at some point in the future the answer is going to be to terminate the Fed and reconstitute some smaller set of its operations in a new entity for reasons that require a separate post to define.

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