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dennisgorelikThe Fed creates a perception that in order to control inflation, the Fed needs to adjust interest rate for government treasuries (higher interest rate - lower inflation; lower interest rate - higher inflation).
Steve Hanke regularly blame the Fed for not paying attention to the money supply (M2).
For example:
So privately, the Fed carefully watches money supply, but publicly the Fed does not want to attract voters' attention to the money supply, in order to have political flexibility to increase money supply (to be able to quietly inflate away the US government debt).
Steve Hanke regularly blame the Fed for not paying attention to the money supply (M2).
For example:
https://www.youtube.com/watch?v=hhHPfNvUzM8&t=543sBut more likely explanation is that the Fed understands pretty well what they are doing.
9:02 Steve Hanke: "the Fed is flying blind. It watches data. It's data dependent, but the only thing that's important to be watching is the money supply and the Fed doesn't seem to watch it."
So privately, the Fed carefully watches money supply, but publicly the Fed does not want to attract voters' attention to the money supply, in order to have political flexibility to increase money supply (to be able to quietly inflate away the US government debt).
