September 16, 2012
The Danger of Bernanke's 'Imaginary Mandate'
Imagine a man from the government walks into the bank that holds your life savings and announces "I am from your government and I hereby declare that all the monies in this bank are now worth 2% less. I will be back next year, and the next, to declare the same." Would that get your attention? For that is precisely what Bernanke and his Federal Reserve are attempting to do. The Federal Reserve's mandates are these; "maximum employment, stable prices, and moderate long-term interest rates." Somehow promoting inflation has crept into the Bernanke Fed mandate. "Committee judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's statutory mandate." As noted, the Fed has determined that a 2% inflation rate is desirable. Aside, they have ignored the clearly stated mandate of "moderate interest rates."...(Read Full Post)