The Fed as Accomplice to Congress’ Fiscal Nonfeasance
Sorry I'm a tad behind on this, better late than never but I couldn't pass up the chance to point out that Dallas Fed President Richard Fisher admitted the Fed is monetizing the debt and bitchslapped Ron Paul all in the same speech. The best part about the bitchslap is that he did it in the same way JDA likes to do it: with a little sugary sweet compliment.
Check out A Need for Innovative Fiscal Policy:
But here is the essential fact I want to emphasize and have you think about today: The Fed could not monetize the debt if the debt were not being created by Congress in the first place.
The Fed does not create government debt; Congress does. Deficits and the unfunded liabilities of Medicare and Social Security are not created by the Federal Reserve; they are the legacy of Congress. The Fed does not earmark taxpayer money for pet projects in local communities that taxpayers themselves would never countenance; only the Congress does that. The Congress and administration play the dominant role in creating the regulatory environment that incentivizes or discourages job creation.
It seems to me that those lawmakers who advocate Ending the Fed might better turn their considerable talents toward ending the fiscal debacle that has for too long run amuck within their own house.
OK, so if a crackhead is destroying themselves by smoking crack all day long, should the crack pusher get off the hook because it's the crackhead doing the buying? Selling crack is just as illegal as buying it, just as monetizing the debt could be construed as beyond the Fed's legal mandate and therefore equally illegal.
Obviously Congress needs to put down the pipe but why can't the Fed help them kick the habit?
Putting off the day of reckoning is only going to serve to take everyone down when we could already be on our way to a true recovery had we accepted the consequences we had coming.
Worse, this manufactured recovery isn't exactly doing what it was supposed to do and Fed policymakers seem to take its failure as a sign that they should be doing more. What makes sense about that approach?