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Principles Of Government

All material on this site is for educational purposes only
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Monetary Policy

  • Categories
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  • Biden and Powell Are at Odds on Inflation

    By Judy Shelton - Sept. 1, 2022

    Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Principles of Government · October 24, 2022 ·

    Welcome to the era of good-cop, bad-cop tactics from major government institutions. Fiscal and monetary policy are now working at odds to fight inflation. The Fed could crush demand by raising interest rates to stratospheric levels only to have a spendthrift White House and complicit Congress pump up consumer prices through fiscal measures that expand spending power—cash payments, subsidies, rebates, student loan forgiveness. Read More

    Filed Under: Articles, Fiscal Policy, Monetary Policy

    You’re Already Paying for That $4.5 Trillion

    By Joseph C. Sternberg - Aug. 12, 2021

    Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved.

    Principles of Government · September 3, 2021 ·

    Taxes haven’t gone up yet, but inflation and lost productivity amount to financial repression. It’s a $4.5 trillion week in Washington. Between the infrastructure and reconciliation bills in various stages of debate, it’s worth discussing in some depth how all this will be paid for. Government spending is conventionally understood as a matter of increased… Read More

    Filed Under: Articles, Fiscal Policy, Monetary Policy

    Rising Interest Rates Will Crush the Federal Budget

    By Red Jahncke - June 29, 2022

    Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Principles of Government · July 21, 2022 ·

    The Federal Reserve’s policies of increasing interest rates and quantitative tightening—reducing its $8.9 trillion balance sheet—will increase the volume and cost of federal government borrowing, slamming the federal budget and exposing the consequences of decades of deficit spending.

    Total federal gross interest cost over the 12 months ending on May 31 was $666 billion. If we include the impending extra interest on Treasury bills and the maturing notes, that figure rises to $863 billion. This is a staggering cost. National military spending was $746 billion over the past 12 months; Medicare spending was $700 billion.
    Read More

    Filed Under: Articles, Fiscal Policy, Monetary Policy

    A Politicized Fed Endangers the Economy

    By Jeb Hensarling - Jan. 17, 2022

    Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Principles of Government · January 22, 2022 ·

    The central bank can’t deliver price stability if it’s distracted by climate change and social justice. During Federal Reserve Chairman Jerome Powell’s reconfirmation hearing last week, there was an understandable focus on inflation. Led by Republican Sen. Pat Toomey, several senators expressed concerns that politicization of the Fed is hampering its effectiveness in dealing with inflation and… Read More

    Filed Under: Articles, Monetary Policy

    It’s Time for the Fed to Go Old School

    By Judy Shelton - Dec. 22, 2021

    Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Principles of Government · December 30, 2021 ·

    No fancy stuff. Raise rates via open-market operations that reduce the size of the balance sheet. The good news is that the Federal Reserve now recognizes that persistent high inflation threatens to overshadow the prospects for real economic growth. The bad news is that the Fed plans to continue buying Treasury debt and mortgage-backed securities… Read More

    Filed Under: Articles, Monetary Policy

    How Government Spending Fuels Inflation

    By Tunku Varadarajan - Feb. 18, 2022

    Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Principles of Government · May 28, 2022 ·

    John Cochrane interview When debt grows so much that people don’t believe the Treasury will pay it, they sell their bonds and buy other things, sending prices through the roof. Annual inflation in the U.S. rose to 7.5% in January, the highest it’s been since February 1982, when it was 7.6% and declining. This current… Read More

    Filed Under: Articles, Fiscal Policy, Monetary Policy

    The Fed Is Playing With Fire

    By Christian Broda and Stanley Druckenmiller - May 10, 2021

    Copyright ©2020 Dow Jones & Company, Inc.

    Principles of Government · May 17, 2021 ·

    Clinging to an emergency policy after the emergency has passed, Chairman Powell courts asset bubbles. With Covid uncertainty receding fast, and several quarters deep into the strongest recovery from any postwar recession, the Federal Reserve’s guidance continues to be the most accommodative on record, by a mile. Keeping emergency settings after the emergency has passed… Read More

    Filed Under: Articles, Monetary Policy

    The Fed’s Risky Fill-the-Punch-Bowl Strategy

    By Kevin Warsh - June 8, 2021

    Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved

    Principles of Government · June 18, 2021 ·

    The Fed should change its policy regime. It should stop buying mortgage securities immediately. Soon after, it should slow its purchases of Treasury debt. It should not tolerate Fed-financed fiscal expansion. It should unlock the handcuffs imposed by its novel doctrine and render an informed and humble judgment on the state of the economy and the attendant risks to the outlook. Read More

    Filed Under: Articles, Monetary Policy

    Lessons From the Great Inflation of 1973-81

    By Phil Gramm and Mike Solon - Aug. 2, 2022

    Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved.

    Principles of Government · August 27, 2022 ·

    Then as now, what drove higher prices was excess demand owing to runaway government spending. Ronald Reagan and Paul Volcker understood.

    History withholds its wisdom from those who ignore its lessons. Forty years ago this month, the fiscal policy of President Ronald Reagan and the monetary policy of Federal Reserve Chairman Paul Volcker broke the back of the 20th century’s most destructive inflation, ushered in an economic expansion that effectively lasted a quarter of a century, and banished inflation—until now. Read More

    Filed Under: Articles, Fiscal Policy, Monetary Policy

    Congress Needs to Rein In a Too-Powerful Federal Reserve

    By Judy Shelton - Sept. 1, 2021

    Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

    Principles of Government · September 3, 2021 ·

    Our nation’s central bank has become too prominent, too political and too powerful.

    The Fed’s ability to purchase massive quantities of U.S. Treasury securities is the dominant factor influencing interest rates across the board and thus the valuation of financial assets. The entire term structure of bond yields reflecting the relationship between short-term and long-term rates is keyed to the 10-year Treasury note rate. What would that benchmark yield reveal if Fed purchases weren’t distorting the market?

    The Fed’s prominence not only undermines supply-and-demand interactions for accurately pricing the cost of investment capital; it also compromises the relationship between fiscal and monetary policy. The Fed’s accommodation of deficit spending by lawmakers poses a conflict of interest with political implications. Besides ensuring that the government’s interest expense for servicing debt is reduced, the Fed remits back to Treasury the earnings on its own holdings. Read More

    Filed Under: Articles, Monetary Policy

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    Characteristics of Government

    • Introduction
    • Socialism
    • Competition
    • Democracy
    • Social Policies Effects on Democratic Government
    • Characteristics and Goals of Modern Liberalism
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    • Democracies and National Defense
    • Voting

    Principles of Good Government

    • Introduction
    • Citizenship
    • Belief System
    • Government Structure and Political System
    • Fiscal Policies
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    • Sound Money
    • The Rule of Law
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    Characteristics of Government

    • Introduction
    • Socialism
    • Competition
    • Democracy
    • Social Policies Effects on Democratic Government
    • Characteristics and Goals of Modern Liberalism
    • Political Correctness
    • Democracies and National Defense
    • Voting

    Principles of Good Government

    • Introduction
    • Citizenship
    • Belief System
    • Government Structure and Political System
    • Fiscal Policies
    • Social Policies
    • Free Markets and Regulation
    • Sound Money
    • The Rule of Law
    • Defense and Foreign Policy
    • Conservation and Environment

    Resources

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