patrick.net

The Fed should have 2 of 5 members appointed by the President, 3 from the Senate every 4 years (each Presidential Election).

3 of 5 have to be NON-banking background members, from Industry and Labor.

Not just the banks deciding what is good for their own self-interest of the financial industry.

Also, needs to be voice pushing for debt repayment. A country with a debtload like ours should be less interested in a strong dollar nor should it allow the Fed to choke Growth god forbid the banks make less money at the expense of literally everybody else from the 30-year mortgage holder to the software company engaged in exporting.

Full disclosure: I live abroad and a strong dollar is AGAINST my self-interest.

Tarantula says

But I though Helicopter Ben destroyed the dollar and now we have hyperinflation.

Asset inflation, which is fine if you own assets. But rates have to stay low or else....

Tarantula says

Shouldn't you own assets?

Haven't said one shouldn't. But the ZIRP policy did indeed result in inflation.

Tarantula says

Shouldn't you own assets? Why in God's name would anyone keep their wealth in currency? Currency is simply to facilitate the exchange of goods and services.

I agree. That is why I tell even senior citizens to put at least 50% of their assets in a conservative growth mutual fund like Vanguard Target Retirement Income Fund (i.e., 30% stocks, 70% investment grade bonds). The other 50% can be in certificate of deposits or in savings bonds.

The I bonds at least beat government-reported inflation by at least 0.5%.

The composite rate for I bonds issued from November 1, 2018 through April 30, 2019, is 2.83%.

Fed sets 'high bar' for change to inflation strategy

The Federal Reserve needs to set a "high bar" for any fundamental change to its inflation targeting strategy, chairman Jerome Powell said, as a debate heats up within the US central bank over ways to boost its capacity to fight downturns.

Mr Powell said the Fed needed to find effective ways to tackle future slowdowns given interest rates were likely to stay relatively low, constricting its ability to stimulate the US economy with rate cuts and sustain inflation at target.

But even as the Fed undertakes a year-long review of its strategy, tools and communications practices, Mr Powell played down the chances of any fundamental change and stressed that the process was more likely to produce "evolution rather than revolution".

The US central bank is examining so-called make-up strategies, in which the Fed seeks to compensate for past undershoots to its 2 per cent inflation target by stimulating the economy and temporarily pushing price growth above that goal.

Mr Powell said such strategies worked in economic models, but they had not been proven in practice.

"Before they could be successfully implemented, there would have to be widespread societal understanding and acceptance — as I suggested, a high bar for any fundamental change," the Fed chairman said.

"In this review, we seek to start a discussion about make-up strategies and other policies that might broadly benefit the American people."

The Fed and other central banks have for some time been worrying about a world that requires low interest rates even when economies are running at full employment. This leaves limited scope to cut rates in times of difficulty and the likelihood is that rates get stuck at the lower bound of zero for long periods, trapping economies in a low-growth, low-inflation paradigm.

Fed economists have estimated that short-term rates could be stuck near zero 30-40 per cent of the time in the future if nothing is done.

Economic theory points to several answers to this problem. Among them is lifting the inflation target, which ought to give central bankers more room to loosen monetary policy and stimulate the economy.

Mr Powell has suggested that this idea is not under consideration in the current review. In his speech in Stanford, California, he said that a strategy in which the Fed seeks to target an average inflation rate over time was theoretically attractive but there would be significant practical obstacles to implementing it. Under such a system the Fed would commit to offsetting past undershoots to the inflation target by overshooting the goal, and vice versa.

For this to work, however, the policy would have to be credible among households and businesses and change their expectations — which is easier to achieve in economic models than in reality. Mr Powell said he and his colleagues on the Federal Open Market Committee believed they had a responsibility to consider policies that "might promote significantly better economic outcomes."

He added: "Make-up strategies are probably the most prominent idea and deserve serious attention. They are largely untried, however, and we have reason to question how they would perform in practice."

Before they could be successfully implemented, there would have to be widespread societal understanding and acceptance — as I suggested, a high bar for any fundamental change.

The Fed's review is also examining the central bank's communications practices, and in his speech Mr Powell acknowledged the potential for confusion driven by the so-called dot plot. If the Fed is no longer offering explicit guidance on future rate moves in its official post-meeting statements, that could end up concentrating more attention on the dot plot, which displays the individual interest-rate projections of Fed policymakers.

That statistical chart has, however, been a "source of confusion", Mr Powell acknowledged. He quoted former Fed chairman Ben Bernanke in pointing out that the dots are merely inputs into policy, but that they do not convey "the risks, the uncertainties, all the things that inform our collective judgment".

Mr Powell added: "If the committee remains largely out of the business of explicit forward guidance, we will need to find other ways to address the collateral confusion that sometimes surrounds the dots."

The Fed chairman also said a full plan for ending the process of reducing the central bank's multitrillion-dollar balance sheet would be announced "reasonably soon".

The central bank, he said, was now "well along" in its discussions of a plan to end its balance sheet runoff later this year. The Fed may then allow commercial bank reserves to "very gradually" reduce further to levels it wants to see by allowing other central bank liabilities such as currency to increase.

"As we feel our way cautiously to this goal, we will move transparently and predictably in order to minimise needless market disruption and risks to our dual-mandate objectives," Mr Powell said.

https://www.afr.com/markets/fed-sets-high-bar-for-change-to-inflation-strategy-20190310-h1c7je

Tarantula says

But I though Helicopter Ben destroyed the dollar and now we have hyperinflation.

Don't tell me y'all were wrong ;)

That was the core claim of shadowstats.com , the place that Iwog used to quote nonstop. Its core prediction was hyperinflation by 2018 at the latest.

Yes, they were wrong.

AD says

The other 50% can be in certificate of deposits or in savings bonds.

annuities for the safe half, two to 3 times the rate of return of CD's, and you can get an annualized payout which lasts a lifetime.

CBOEtrader says

annuities for the safe half,

Are annuities insured? Didn't insurance companies have to be rescued in the last bailout? No guarantee they will be in the future.

willywonka says

Didn't insurance companies have to be rescued in the last bailout?

I'm not sure about being rescued but some went under and were sued by policy holders. I don't recall the result.