Sen. Whitehouse: Fed Needs To 'Start Giving A Red Hot Damn About The American Public'

[kpete]

Fed Needs To 'Start Giving A Red Hot Damn About The American Public,' Says Sen. Whitehouse

Two days before Ben Bernanke's confirmation hearing, most Democrats on the Senate Banking Committee are withholding judgment, waiting to hear directly from the chairman of the Federal Reserve.

Given the depth of the ongoing economic crisis, the hearing promises to be a lively one, as senators plan to take out their constituents' anger on the monetary policy chief. Bernanke will likely have a difficult time explaining why the Fed wants to keep bank lending to a minimum while the lack of bank lending is exacerbating the unemployment crisis. At a meeting of the Federal Open Market Committee earlier in November, Fed officials expressed concern that banks might start lending again.

The Fed is required by law to keep inflation low and to maximize employment. But, according to Sen. Sheldon Whitehouse (D-R.I.), the Fed only seems interested in performing one of those tasks. High unemployment keeps wages down. Wage growth is seen by the Fed as a sign of inflation and something that should be kept down.

Before voting to confirm Bernanke, Whitehouse told HuffPost he wants to hear "that they're willing to take their eyes off an exclusive gaze on the welfare of Wall Street and start giving a red hot damn about the American public."

more:
http://www.huffingtonpost.com/2009/12/01/fed-needs-to-start-giving_n_375859.html

[nebenaube]

1. One statement from the article:

Wage growth is seen by the Fed as a sign of inflation and something that should be kept down.

I don't give a damn what anyone thinks. To my mind this policy is a fundamental defect in the system. It should be applied in a exception handler not a core directive.

[rurallib]

3. must be an exception for CEOs.

[NYC Democrat]

4. that Policy makes no sense to ANYONE who has any sense about economics

Seriously its common sense that if wages grow people will spend more money and the economy will then grow.

[laughingliberal]

2. Also in the article:

<snip> Suffering high unemployment in order to keep inflation low cuts against the Fed's legal mandate. Or, to put it more bluntly, it is illegal.

"The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates," reads the relevant statute. <snip>

Yeah, I've never seen any action by the Fed I thought was aimed at maximizing employment. Their obsession with controlling inflation does seem to stifle job creation.