Indeed, it only underscores the fact that our monetary system is still not functioning properly. If it were, the Federal Reserve’s $4.5 trillion balance sheet would long ago have translated into healthy, if not inflationary, levels of spending.”
Although thousands of Fed watchers make their living by pretending otherwise, the truth is the science behind the FOMC’s monetary policy decisions is decidedly humble. The ends that the committee is charged with achieving — full employment and stable prices — are dictated by the law of the land, while the statistics it relies on for guidance are mostly the stuff of headlines.
True, the FOMC also relies on confidential reports prepared by staff economists at either the Federal Reserve Board or the various regional Fed banks, but that information tends to be less influential than the latest statistical developments.