Our Federal servants are sheltered from the effects of their own actions
Well-discussed and revealed is the arrangement our federal system has arrived at wherein
those who pass legislation are not necessarily bound to its constraints and effects. Notable are the securities insider trading laws and the health insurance mandates of late.
Congress and their staffs have different guidelines for securities trading, still. Despite a brief “blip” in the media covered outrage, this insider trading issue has gone to the dust bin. The health insurance matter of what is good for “thee” does not apply to “we” still festers with the high information citizen.
Madison had warned of all this in his Federalist 57. He offered that the “promise” of this form of government would be that “that they (Congress) can make no law which will not have its full operation on themselves and their friends, as well as on the great mass of the society.”
If it were only also true for the Federal Reserve decision makers.
The Federal Reserve promoting inflation is yet another instance of this abuse, though more disguised and subtle. Fully realizing the first two lessons of any discussion regarding the Fed, that it is not Federal and it has no reserves, the matter of encouraging inflation is quite bothersome.
Economists know that the easiest way out of a debt burden is to depreciate the currency and repay prior obligations with the cheaper devalued currency. This seems to be Yellen’s game.
Janet and other federal or quasi federal servants have inflation protections built into their compensations and especially into their retirement plans and pensions. In other words, what we have here are people promoting inflation who are insulated from its destructive effects. Their cost of living adjustments and their inflation adjusted pensions and salaries are their buffer. And we know by now that the government will print money to meet its financial obligations.
Despite the appearance that the Federal Reserve is duty bound to its outdated mission statement, especially promoting maximum employment, they rewrite the “stable prices” mandate to a degree in which 2% inflation is good. (At 2% prices double every 36 years). They also rewrite the “moderate interest rates” to mean that near zero or historically abnormal rates are still “moderate”. (The definition of the word moderate is twisted.)
Be certain that all the ill effects of these policies will be concentrated on the middle class saver, the prudent consumer, and the retiree who is fending for himself. Congressmen and other federal servants like Janet will do just fine.