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- The Federal Reserve Was Supposed to Ease Economic Instability. Instead, It’s Made it Worse.
The Federal Reserve Was Supposed to Ease Economic Instability. Instead, It’s Made it Worse.
A responsible political class would significantly reform the organization. Instead, they will likely continue to give it more power.
by Veronique de Rugy Reason.com
I have heard some people say that the Federal Reserve has a credibility problem. The agency missed the biggest inflation spike since the 1980s, was slow to start rolling back pandemic policies, and failed to spot the risks that some banks, such as Silicon Valley Bank (SVB), were facing. Instead of instilling confidence and stability, the Fed’s policy communication has at times been so unclear and confused that it has only served to exacerbate market volatility.
Credibility is a big enough problem, but unfortunately the Fed’s issues go beyond that. The Fed as an institution, along with its policies, seem to be a main source of the economic instability America faces. In fact, David Stockman, Budget Director under President Ronald Reagan, calls the Fed “an SDI”—a Systematically Dangerous Institution.