Yes, it has. When the FDA was formed in 1906, it didn’t write memos to notify buyers about the state of the meat-packing industry, it banned them. When thalidomide was found to cause birth defects, it was banned.
When the Federal Reserve Act was passed, the result was not just a letter written to customers of specific banks. It brought specific changes on how banks may legally operate.
The Fed and the government will never admit this, however, which is why they blame inflation on:
1. speculators
2. profiteers
3. wage-price spiral
4. cost push
5. demand pull
6. Putin
7. Arab cartels
8. oil companies
and about anything else they can think of. Anything but the real reason.
This is where you get into wild conspiracy territory. It’s not unlike saying the FDA was created to provide pharma with a captured market.
GP comment was writing about "the result" of, not "the purpose of".
-- Monetary History of the United States, pg 191, Friedman
Endemic inflation set in the next year.
In that context, his statement is fine as a historical study but may not be suitable to model current economics.
What it is is a 2% annual tax on the economy. Even worse, your illusory inflation "gains" on assets then get taxed, too.
The only thing it is good for is the politicians.
1. Constant 2% inflation at least doesn't have the negative effects of unpredictable inflation, its just a 2% tax.
2. Certain prices appear to be slightly sticky in that they don't go down, for example, wages are almost never cut in nominal terms, for psychological/cultural reasons- people tend to quit if their wages get cut. Slight inflation allows these to slowly decrease without running into the asymmetric price stickiness behavior.
What do you think?
Beyond that, the govt is a service organization. Those services run the gamut from physical security, to regulation, to providing information.
The government does not exist to make sure that you just get the right amount of information that you need so you aren't cognitively overburdened while they handle everything else for you behind the scenes. It's never worked that way.
> The question is really about where the risk threshold is that transitions their role from warning to regulating.
This came from CFPB, which exists primarily to warn against bad actors in the financial world. They're positioned to do this largely because the finance industry has repeatedly lobbied successfully to block effective regulation. To get around this, Elizabeth Warren created CFPB as an office explicitly to watch how the finance industry interacts with consumers post-2008. The fact that this warning even exists represents an improvement because CFPB was created exactly to do this. They do not have the power to declare who's a bank and who's not.
And to be clear, PayPal et al haven't committed any crimes here, CFPB is just pointing out that they're not insured as bank so you can't rely on the government bailing them out. CFPB sued Wells Fargo over the fraudulent account scandal, etc. They're more than capable of acting when crime has occurred. The problem (and this is the product of the finance industry understanding the game) is that a company failing isn't itself a crime. No bank execs went to prison over 2008 because they didn't commit any crimes as the legal system defines them. The best thing the government can do in so many cases is warn people not to be stupid with their money. They can't actually manage it for you.