October 16, 2018
Mr. President, Money's Broken. Please Fix It.
"I think the Fed is making a mistake," President Trump told the press recently. "They are so tight." He was referring to the Federal Reserve's decision on September 26 to raise the federal funds rate to a range of 2.00% to 2.25%. That move was the sixth uptick since President Trump took office, and the market senses that the Fed will crowbar the pinch point up again in December. President Trump is right to be worried that all these moves will tank the economy. But jawboning the Fed is not enough. The president should push for monetary reform. It's long overdue. In the present monetary regime, long-term interest rates are determined by market pressures in the bond market, but the federal funds rate, the short-term interest rate controlled by the Fed, is still government property. It's set by the members of the Federal Open Market Committee (FOMC), who meet...(Read Full Article)