The Fed’s imminent interest-rate decision – Is America ready for lift-off?

Re:The Fed’s imminent interest-rate decision – Is America re... by AnimalMuppet on Friday December 11, 2015 @07:20PM (#10721101)

> > Inflation has been subdued for years and has recently declined further

> The reality is the free ride on inflation can't last forever and if the Fed fails to predict the future it can get pretty grim.

The Fed didn't actually care about inflation. It cared about avoiding a depression. And it did pretty well after 1940. The recessions were becoming progressively less severe, IIRC. Unfortunately, inflation was growing. In 1981, Reagan and/or events forced the Fed to get serious about inflation, and the result was the double-dip recession of 1981/82. Since then, inflation has been steadily declining (that is, the peak in each cycle is lower than the peak in the previous cycle). However, recessions have been growing more and more severe.

Maybe there's some kind of a restriction on economic management/control: You can minimize inflation, or recession severity, but not both?

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Re:The Fed’s imminent interest-rate decision – Is America re... by fweespeech on Tuesday December 15, 2015 @06:05PM (#10741132)

With monetary policy, yes.

Fiscal policy was supposed to be the other component which is what Bernake kept saying when he was chairman when talking to Congress...the Fed really only has one knob it can turn in a very, very extensive machine.

Federal debt via stimulus is far lower risk than the Fed attempting to control recession severity.

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