Dr. Stephen D. Williamson, Vice-President of the St. Louis Federal Reserve recently published a paper “Current Federal Reserve Policy under the Lens of Economic History: A Review Essay.” In this paper, Dr. Williamson makes a rather astonishing admission: that the Federal Reserve’s policies over the last seven years have not helped the economy:
Specifically, he believes the zero interest rates in place since 2008 that were designed to spark good inflation actually have resulted in just the opposite. And he believes the “forward guidance” the Fed has used to communicate its intentions has instead been a muddle of broken vows that has served only to confuse investors. Finally, he asserts that quantitative easing, or the monthly debt purchases that swelled the central bank’s balance sheet past the $4.5 trillion mark, have at best a tenuous link to actual economic improvements.
Not that Williamson has embraced Austrian economics. In fact, in his paper he complains that the Fed is not inflating enough! Still, having a Fed official acknowledge the Fed's failures is a major development and raises several interesting questions:
How many other Fed officials agree that the Fed’s “Quantitative Easing” has not helped the economy?
How does the Fed really evaluate the current state of the economy and is the real reason the Fed keeps delaying interest rates because it fears pushing the fragile economy over the brink?
What contingency plans does the Fed have in the event of a downturn—including any agreements to bailout large Wall Street Firms and foreign central banks?
When will the Senate vote on, and pass, Audit the Fed?
Campaign for Liberty is gearing up a major effort to ensure the Senate finally votes on,and passes, Audit the Fed legislation this year. Please support our efforts by contributing to our matching grant challenge.
(hat/tip: Bonnie Kristen at RARE).
Tags: Audit the Fed