Comments on: WEEKEND READING http://pragcap.com/weekend-reading-21 Sat, 26 May 2012 12:51:06 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Rob http://pragcap.com/weekend-reading-21/comment-page-1#comment-8979 Rob Sat, 14 Nov 2009 18:05:33 +0000 http://pragcap.com/?p=12796#comment-8979 The Fed may be arrogant, but the real problem is their DUAL mandate. They as all other central banks should have the mandate of price stability. If they should have any second mandate it should be to maintain the stability/strength of the dollar internationally and clearing imbalances in exchange rates when they diverge greatly from purchasing power parity. THEY should push the dollar up against the EURO and down against the Asian currencies. The Treasury has ZERO interest in maintaining either price stability or a strong dollar. As the world's biggest borrower they are perfectly happy to see the real value of their debt decrease while the nominal value skyrockets. The mandate for full employment should be given to the private sector. Europe has too little flexibility but the US business has far too much flexibilty and severance is far too low. Companies should eliminate workers in major restructuring only, not simply due to changes in the business cycle. American CEOs have absolutely no social conscience. What is good for the individual or for an individual corporation is not necessarily good for society as a whole. But having the Fed manage employment with interest rate policy is completely nuts. The Fed may be arrogant, but the real problem is their DUAL mandate. They as all other central banks should have the mandate of price stability. If they should have any second mandate it should be to maintain the stability/strength of the dollar internationally and clearing imbalances in exchange rates when they diverge greatly from purchasing power parity. THEY should push the dollar up against the EURO and down against the Asian currencies.

The Treasury has ZERO interest in maintaining either price stability or a strong dollar. As the world’s biggest borrower they are perfectly happy to see the real value of their debt decrease while the nominal value skyrockets.

The mandate for full employment should be given to the private sector. Europe has too little flexibility but the US business has far too much flexibilty and severance is far too low. Companies should eliminate workers in major restructuring only, not simply due to changes in the business cycle. American CEOs have absolutely no social conscience. What is good for the individual or for an individual corporation is not necessarily good for society as a whole.

But having the Fed manage employment with interest rate policy is completely nuts.

]]>