“The selection of the next chairman of the Federal Reserve has generated far more attention than it deserves. Political leaders should instead be engaging in a far-reaching debate about the fundamental direction of U.S. monetary policy.”
USAGOLD note: Jayakumar raises issues to which we have alluded in the past, i.e., that the Fed is evolving to more consensus-driven decisions rather than a policy course set by a dynamic Fed chairman – such as Alan Greenspan or Paul Volcker. That translates in the real world to a more politically driven central bank – something to which a good many discerning investors would subscribe without much of an argument. For those in digging a little deeper into the role of the Federal Reserve in the current political economy, this article offers much food for thought. “The real debate,” he says, “should be about the efficacy of pursuing ultra-accommodative monetary policies when the economy is facing supply constraints and rising inflationary pressures.” Since the doves seem to be in control at the Fed, is there much doubt the direction we are headed?