Tag Archives: economy

It’s Time To Reconsider The Fed’s Dual Mandate

[This post is coauthored with Johannes Schmidt]

All this week, people anxiously awaited results from the Federal Reserve’s Federal Open Market Committee meeting in Washington, D.C. Though many expected the FOMC would decide to finally raise interest rates and begin to normalize monetary policy, on Thursday it was announced that rates would remain near zero.

For months, this decision has been subject to speculation, due perhaps to mixed messages from some of the Fed’s top officials. Continued miscommunications from the Fed are weakening the FOMC’s credibility and signaling to investors that the Fed lacks a clear strategy. Such unpredictability and reliance on the decisions of 12 individuals inevitably leads to resource misallocations and mal-investments. Falling stock markets indices are perhaps a signal of this.

Such are the pitfalls of the Fed’s short-sightedness and undisciplined discretion. To foster a healthy economy, the Fed should instead provide clear forward guidance, in the form of adherence to pre-determined rules that guide its actions, while it pursues beneficial long-run objectives—namely, price stability. Nobody understands this better than another group of economists that also met in Washington this week, the Shadow Open Market Committee.

Read the rest on Forbes here.

4 hidden gems in the first GOP Debate

Last night’s GOP debate offered plenty of great moments, including Scott Walker’s wink, Mike Huckabee’s “pimps” reference, and the many waggings of Donald Trump’s finger. There was some substantive discussion of policy, too. A few candidates, however, made only passing references to ideas that should have gotten more time. Here are four of them.

Read the rest on CapX here.