It’s no surprise that the June Federal Open Market Committee (FOMC) concluded with rates being held near zero. We were offered some reassurance that the Fed expects to have “no rate increase at least through 2022.” Not mentioned was the amount of bond buying required to ensure that rates remain low for the next two years. However, Chairman Powell offered other insights.
[This article is part of the Understanding Money Mechanics series, by Robert P. Murphy. The series will be published as a book in 2021.]
When an economic crisis hits, everybody from the Fed chairman to the man on the street knows that the Fed must print more money and reduce interest rates and that the government must spend more money and go deeper into debt. This is seen as necessary to “fill the gap” left by the private sector.
This approach is entirely wrong. In fact, it is highly counterproductive.
Last Friday, the US Bureau of Labor Statistics released new unemployment data. The report surprised many because it showed a decrease in the unemployment rate, while many observers had expected an increase.
Americans, as a rule, are poorly informed about the vast insights into liberty that some their countrymen have offered them. But moving beyond our borders and language, many know next to nothing. That is why it is valuable to find, in Star Trek lingo, that “undiscovered country” of understanding.
June 30 is Frederic Bastiat’s birthday. That is noteworthy, as his contributions on behalf of liberty were not only massively important, but have stood the test of time.
As Julian Adorney and Matt Palumbo wrote for the Mises Institute, he used “taut logic and compelling prose to bring the dry field of economics to hundreds of thousands of laymen.”
June 14 marks Flag Day, commemorating the Second Continental Congress’s authorization for a new American flag. But it is an unusual holiday.
The aftermath of the May 25 police killing of George Floyd in Minneapolis has set off riots, protests, looting, and waves of social demands and changes that will take years to sort out. Yet perhaps the most interesting and provocative development has been the demand for cities to “defund” municipal police departments.
Thanks to the COVID-19 panic this year, graduates at America’s institutions of higher education missed the “opportunity” to be lectured by some celebrity or politician about the importance of wanting a better world, or how racism is bad, or about how one should celebrate life.
On the heels of what might be heralded as one of the most important Fed meetings in over a decade, all we can do is speculate about what our central planners have in store.
