Fed News Friday: Philly Gov Plosser Calls for Changes to Fed Monetary Policy
June 10th, 2011
One governor realized inflation might go haywire on us. They're waking up to their own negligence.
Could the Federal Reserve finally be seeing the light?
In a press conference held yesterday, Philadelphia Fed Governor Charles Plosser has stated that he will not sign on to any monetary stimulus plans, and called for reforms in the Federal Reserve’s inflationary practices. These statements come at a time of increased scrutiny towards the Federal Reserve and the economy as a whole, evidenced by the successful quashing of Peter Diamond’s bid for Federal Reserve Governor and the spike in last week’s unemployment figures. Calling inflation targets an “important element” in monetary and economic stability, Mr. Plosser discussed how inflation practices should be looked at in the long and medium-run rather that in the short run, but said monetary policy is not a cure-all for America’s fiscal woes.
Dealing with the public’s perception of the Fed, Mr. Plosser said that it was “somewhat troubling” that there is so little trust in the Fed to carry out its stability practices, citing the unstable inflation projections and the “extreme accomadative practices” that have taken place in the aftermath of the recession. He also criticized the FOMC for inaccurately measuring US outcome gap, and warned of inflation that wouldn’t be attributed to monetary stimulus at all, which is more difficult to correct.
This press conference showed an unusual, yet welcome change from typical Federal Reserve platforms. Mr. Plosser’s pragmatism might be the kick in the rear that Ben Bernanke needs to halt his money printing plans, and actually work to make our currency sound. Unfortunately, Mr. Plosser is only one of twelve Fed governors, and like the others, he wants the debt ceiling to rise to prevent potential defaults, but if more Fed workers adopt his platforms, America could begin the steady return to a sound, strong dollar, so that by 2019, you’re not paying $40 for a beer one day, and $50 the next.
