Track the Fed’s Unraveling
By Daily Bell Staff - January 26, 2016

The Fed’s phony mandate … How many times have we heard top Federal Reserve officials solemnly invoke the Fed’s “dual mandate” as the be-all, end-all justification for their monetary policy decisions? … But the so-called dual mandate was not exactly written in stone, it turns out. Rather, it has survived as a disturbing legislative artifact from some 40 years ago — when a congressional resolution was put forward to make the Federal Reserve answerable to the White House. – The Hill

Dominant Social Theme: The Fed needs to be reined in. Its actions need to be calibrated. Its results need to be further focused.

Free-Market Analysis: Here’s an analysis by The Hill that is half right. The part that is wrong we’ll mention later in this analysis. The part that is right we’ll discuss now.

The Hill is not exactly a muckraking publication but in this exposé it provides us with a good history lesson.

In fact, we learn the Fed’s dual mandate is actually a triple mandate and that the third part of the mandate is simply ignored by the Fed.

The Humphrey-Hawkins Act … decreed that the inflation rate should be brought down to zero by 1988; that the federal government should achieve and maintain a balanced federal budget; and that the United States should promote a “sound and stable international monetary system.”

The legislative language amending the Federal Reserve Act explicitly directs the Fed to aim its efforts at achieving not two, but rather three objectives, i.e., “to promote the goals of maximum employment, stable prices, and moderate long-term interest rates.”

The article points out that the Fed is obviously operating under triple mandate not a double one. Additionally, the reason the third mandate is not mentioned is because building and sustaining “moderate” long-term interest rates is not something the Fed has been able to accomplish – if it even wished to try.

Give the article credit. Having exposed the “third mandate,” the narrative becomes blunt and even savage. It uses the word “nonsensical” to describe the Fed’s actions and begins to pick apart the logic behind them.

The “maximum” employment that the Fed is responsible for doesn’t include something like 90 million adults in the US that have formally given up searching for employment.

And are prices stable? “It’s hard to be grateful to the Fed for stable prices when Yellen herself is constantly vexed that inflation is not considerably higher — despite her best efforts to pump up the money supply by suppressing interest rates.”

And what has the Fed done for seniors and savers by pinning rates to the zero-bound? So many have seen their retirements restricted or even vanish into the horizon.

The conclusion here, stated by the article, is that the Fed “is being revealed as not only less-than-divinely ordained, but supremely fallible in carrying out the ill-conceived tasks it was assigned so very long ago.”

The increasingly irritated tone of the article aligns with observations we’ve been making for years. As the Internet Reformation expands, the most high profile, illogical facilities are increasingly exposed. The media itself, military false-flag operations and central banking are among those receiving attention.

The article even makes the point that the Fed was developed at a time when the culture itself was more comfortable with government activism and then asks, ironically, “Central planning through central banking; what could go wrong?”

The answer: Much has gone wrong and this latest rate hike may go down as one of the worst mistakes the Fed has ever made. Now we may hear Janet Yellen explaining how the Fed’s upward rate direction has been pre-empted by events of the moment.

The article concludes, “You won’t find a commitment to sound money and free enterprise, but rather a government-knows-best mentality.”

Conclusion: Bear in mind this is an article in The Hill, and one that shows clearly that the central banking meme is leaking credibility throughout the media. Its crumbling is significant, indeed. Track it.

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  • PatrickHenry1789

    But, but, but…the stawk market was up by triple digits today. Everything is peachy now.

    • Praetor

      Shows how much control they have! Up/Down, Up/Down! Buy low sale high! The house always controls the odds!

      • PatrickHenry1789

        The PPT sure did do some heavy lifting today for sure. Old Yeller says we just need to buy the dip tomorrow.

  • Danny B

    Where is Bischoff when you need him? I’ll try to ghost his information and logic.
    The FED was originally created to stop bank runs from wildcat banking. The FED would lend money to corporations for GOOD collateral when they experienced temporary runs or shortages. Armstrong excoriates Jackson for killing the central bank;
    It is amazing that Armstrong forgets a VERY important TRUTH. He should have read up on Lord Acton. By 1920, the FED under Benjamin Strong was illegally selling U.S. GOV debt on the secondary market. That was just 7 years after creation. 16 years after creation, the FED created the great depression. The FED was forced to buy GOV debt for both welfare and warfare. That was NOT it’s original mandate.

    The inescapable thing that Armstrong can’t seem to factor in is; The power of the FED would invariably lead to the corruption of the FED. We can’t forget that the FED walked hand-in-hand with a corrupt congress.

    On the same page, Armstrong writes about elastic money. It is somewhat like the idea of Dr. Fekete; real bills.

    Bischoff could recite chapter and verse of the mutations laid on the FED. Suffice it to say; if you have a money-machine, you will have a LOT of needy friends.

    The FED is strictly in the business of creating the base-money supply. The private banks are in the business of creating the disappearing-money supply. (If all loans are repaid, there is no money in circulation). The FED has a printing press and a mandate from the uber-parasite. What do you expect?
    This is where the Bank of North Dakota comes into the picture as an outlier. It is NOT in the business of creating money. It survives on taxes and banking is a side business. It only loans money where an income stream is identified to repay the loan. It has a much better record than the big N.Y. banks. If you survive by printing money, you are likely to over-print.

    Ingo,,, take it from here.

    • alaska3636

      I think Armstrong believes a “Mike” should take over things such as elastic money supply. For a man who continuously brings up Ecclesiastes, “That which has been is that which will be, And that which has been done is that which will be done. So there is nothing new under the sun,” the only explanation for adequate control of central power is something new under the sun. A “Mike” would be something new…

  • gamathers

    The FED doesn’t work for the benefit of the US government or it’s citizenry. It works for the owners of the big banks. It really is a legalized banking cartel. And we are surprised when they bail out the big banks and putting all of America more in debt? While by-the-way the CEO’s and executives give themselves large bonuses. Look up “G Edward Griffin Creature From Jekyll Island Second Look at the Federal Reserve” on YouTube.

  • philip

    Danny B from philip Have always enjoyed your blogs, informative and entertaining, Associating Professor Fekete with Armstrong is insulting, the two are light years apart. Fekete did use the word elastic apropos Real Bills, a poor choice. Until you or any other person, economists etc have the temerity to debate him on this subject he is the master. I would pay to listen in and wonder which Austrian would be chosen. Armstrong should attend. Keep blogging. Philip

    • Danny B

      Armstrong has the biggest rear-view mirror in existence. He has a phenomenal command of history. My major disagreement with the good professor is; this time IS different. Never before in history have we had extensive birth control. Never before in history have we had this level of automation. Never have we had job niches disappear so fast. Never have we had such a huge percentage of people who are untrainable. 50% of the people in Detroit are illiterate. Never before has the world had such a saturation of non-physical money. Never before has shipping been so cheap that it would pay to ship raw iron castings from India to the West. Never before have we had energy consumption so high. Never before have we had so many acquifiers going dry so fast.
      Don’t forget the bees and bats.
      M.I.T. says that 50% of children will be autistic in TEN YEARS,
      Can any economy support 50% of it’s population being autistic? 20,000 Sq. miles of American farmland is saturated with Roundup,,, to the point that plowed-under crops won’t break down. All the beneficial bacteria is gone from the soil.

      I don’t believe that Socrates can accurately factor in these new pressures.
      Yes, I’ll keep blogging. Thanks Philip Here’s a link,,, JIC

  • philip

    philip You didn’t give the name of the contributor Judy Shelton. She has written a small PDF book-A guide to sound money and there is no doubt whose side she is on.

  • tom hewitt

    “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

    Friedrich Hayek

  • rahrog

    I think that most folks who stop at DB agree that the FED is corrupt and incompetent. The question is what is to be done about it? What are you prepared to do?

  • Pilgrim

    Is it just me or does it seem like the more congress does to fix the economy the worse it gets?

  • 12 tribes israel

    Kennedy took on the federal reserve