The Left thinks it's accurate. The problem is that they believe it to be the right course of action. Covertibility is a "special" type of moonbat, though.
Authored by Richmond Fed head Jeffrey Lacker, op-ed via The Wall Street Journal, Modern central banks enjoy extraordinary independence, typically operating free from political interference. That has proved critical for price stability in recent decades, but it puts central banks in a perpetually precarious position. Central-bank legitimacy will wane without boundaries on tools used for credit-market intervention. Since 2009 the Fed has acquired $1.7 trillion in mortgage-backed securities underwritten by Fannie Mae and Freddie Mac , the mortgage companies now under government conservatorship. Housing finance was at the heart of the financial crisis, and these purchases began in early 2009 out of concern for the stability of the housing-finance system. Mortgage markets have since stabilized, but the purchases have resumed, with more than $800 billion accumulated since September 2012. We were skeptical of the need for the purchase of mortgage assets, even in 2009, believing that the Fed could achieve its goals through the purchase of Treasury securities alone. Now, as the Fed looks to raise the federal-funds rate and other short-term interest rates to more normal levels, that normalization should include a plan to sell these assets at a predictable pace, so that we can minimize our distortion of credit markets. The Federal Open Market Committee’s recent statement of normalization principles did not include such a plan. For this reason, the first author, an FOMC participant, was unwilling to support the principles. The Fed’s MBS holdings go well beyond what is required to conduct monetary policy, even with interest rates near zero. The Federal Reserve has two main policy mandates: price stability and maximum employment. In the past, the pursuit of higher employment has sometimes led the Fed (and other central banks) to sacrifice monetary stability for the short-term employment gains that easier policy can provide. This sacrifice can bring unfortunate consequences such as the double-digit inflation seen in the 1960s and 1970s. But during the Great Moderation—the period of relatively favorable economic conditions in the 1980s and 1990s—a consensus emerged that, over time, the central bank’s effect on employment and other real economic variables is limited. Instead, the central bank’s unique capability is to anchor the longer-term behavior of the price level. Governments came to see that entrusting monetary policy to an institution with substantial day-to-day independence could help overcome the inflationary bias that short-term electoral pressures can impart. The independence of the central bank cannot be boundless, however. In a democracy, the central bank must be accountable for performance against its legislated macroeconomic goals. What is essential for operational independence is the central bank’s ability to manage the quantity of money it supplies—that is, the monetary liabilities on its balance sheet—because this is how modern central banks influence short-term interest rates. A balance sheet has two sides, though, and it is the asset side that can be problematic. When the Fed buys Treasury securities, any interest-rate effects will flow evenly to all private borrowers, since all credit markets are ultimately linked to the risk-free yields on Treasurys. But when the central bank buys private assets, it can tilt the playing field toward some borrowers at the expense of others, affecting the allocation of credit. If the Fed’s MBS holdings are of any direct consequence, they favor home-mortgage borrowers by putting downward pressure on mortgage rates. This increases the interest rates faced by other borrowers, compared with holding an equivalent amount of Treasurys. It is as if the Fed has provided off-budget funding for home-mortgage borrowers, financed by selling U.S. Treasury debt to the public. Such interference in the allocation of credit is an inappropriate use of the central bank’s asset portfolio. It is not necessary for conducting monetary policy, and it involves distributional choices that should be made through the democratic process and carried out by fiscal authorities, not at the discretion of an independent central bank. Some will say that central bank credit-market interventions reflect an age-old role as “lender of last resort.” But this expression historically referred to policies aimed at increasing the supply of paper notes when the demand for notes surged during episodes of financial turmoil. Today, fluctuations in the demand for central bank money can easily be accommodated through open-market purchases of Treasury securities. Expansive lending powers raise credit-allocation concerns similar to those raised by the purchase of private assets. Moreover, Federal Reserve actions in the recent crisis bore little resemblance to the historical concept of a lender of last resort. While these actions were intended to preserve the stability of the financial system, they may have actually promoted greater fragility. Ambiguous boundaries around Fed credit-market intervention create expectations of intervention in future crises, dampening incentives for the private sector to monitor risk-taking and seek out stable funding arrangements. Central bank operational independence is a unique institutional privilege. While such independence is vitally important to preserving monetary stability, it is likely to prove unstable—both politically and economically—without clear boundaries. Central bank actions that alter the allocation of credit blur those boundaries and endanger the stability the Fed was designed to ensure.
And the hits just keep coming! Confidence in Obama on economy hits new low By Peter Schroeder - 10/07/14 09:44 AM EDT Confidence in President Obama’s economic policies has reached an all-time low. Just 24 percent of Americans say they are extremely or quite confident in Obama’s plan for the economy, according to the CNBC All-America Economic survey released Tuesday. In June 2013, 33 percent gave Obama’s economic policies a thumbs-up, which was the previous record low. Forty-four percent of Americans say they have no confidence in Obama’s economic policies, tying a previous record set in August 2012. The lingering economic pessimism comes despite signs that the economy is growing at a solid rate and with the unemployment rate at its lowest level in six years. However, wage growth remains muted at best, leaving many Americans feeling as if the economy has not improved much at all since the recession hit. The persistent discontent is also complicating Obama's attempts to tout the economic gains under his watch in an effort to help Democrats hold off Republican challengers at the polls. At the same time, he acknowledges much of the lingering concern, pushing for initiatives like increasing the minimum wage and equal pay for women to further bolster Democratic campaigns. Obama is facing broad concern about his economic policies from all groups. Just 45 percent of Democrats say they have confidence in his policies. But even facing those bleak numbers, Obama is leading the pack, when it comes to policymakers. Only 11 percent of those polled express confidence in congressional Republicans’ economic policies, and congressional Democrats fall in the middle with a 16 percent approval rating. The poll found widespread dissatisfaction with the state of the economy, despite the run of solid data. Seventy-nine percent rated the economy as fair or poor, down slightly from 84 percent a year ago. Just 18 percent say the economy is excellent or good. But even within that group of optimists, less than half say they have confidence in Obama’s policies. http://thehill.com/policy/finance/219978-confidence-in-obamas-economic-plan-hits-new-low Wonderful job, Mr. President!
John Boehner Just Admitted on Twitter That Republicans Have No Jobs Plan In a breathtaking display of honesty, House Speaker John Boehner tweeted out the Republican Party’s five-point jobs plan Tuesday morning—and it was entirely empty. Take a look: Speaker John Boehner ✔ @SpeakerBoehner Follow ① ② ③ ④ ⑤ #5pts4jobs → http://Speaker.gov/5points 9:37 AM - 7 Oct 2014 Liberals have had quite a bit of fun with this on Twitter (as I have), but Boehner accidentally told the truth in that tweet. The Republican Party doesn’t have and has never had a jobs plan during the Obama presidency. To see that, take a look at the actual five-point “jobs plan” that Boehner links to in his tweet. He wants to reform our tax code, cut spending, reform the legal system, cut regulations and improve our education system. Those all seem like good ideas—and could generate increased growth in the long-run—but these are all supply-side solutions intended to increase worker productivity and encourage business investment. But the economy currently suffers from a shortfall in demand—consumers aren’t buying enough stuff. When the Great Recession hit, Americans dramatically cut back on spending, forcing businesses to fire workers, who cut back their own spending and this negative cycle repeated itself. The federal government used both fiscal and monetary stimulus to try to restore some of this demand and get businesses hiring and consumers spending again. It helped, but it wasn’t sufficient to close the hole in demand. In turn, we have had a weak recovery, made even worse by a premature turn to fiscal austerity. Republicans, during this period, have consistently advocated the same jobs plan that Boehner laid out Tuesday. They opposed the stimulus, prompted the turn to austerity and criticized the Federal Reserve’s policies. All of the other policies Boehner suggests—reforming our regulatory, legal and education systems—are irrelevant to the demand problem facing the economy. In other words, Republicans have tried to make it harder for the government to fill the hole in demand and return the economy to full employment. That’s the cruel irony in Boehner’s tweet. It would be funny, but it represents the massive economic damage that the Republican Party has unnecessarily inflicted on the country the past six years. And that’s not funny at all.
More from the masses, a recent poll question: As you may know, the federal government runs a deficit when it spends more than it takes in during a given year. Since Barack Obama became president in 2009, would you say that the annual federal budget deficit has increased, stayed the same, or decreased? Increased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54% Stayed the same . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14% Decreased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19% Not sure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13%
Between the Federal Government and Federal Reserve, in excess of 10 Trillion dollars has been borrowed/printed and spent in the economy, since 2009. That's an average of a little under 2 Trillion dollars a year. Given that, can any of you cheerleaders argue those are 'healthy' economic conditions?