On Apr 28, 2011, at 12:43 PM, Julio Huato wrote: > A point that Max (not Marx, but Max) has made here before (or at > least, that's how I have construed his point) is that it is incumbent > upon the left to promote the idea that financial obligations (tacit or > explicitly legal) contracted by the federal government with regular > people (the safety net) are as sacred and hardwired as the financial > obligations between, say, the Treasury and the holders of regular > Treasuries or between GE and its bondholders.
What contract? I don't recall signing anything guaranteeing me certain SS benefits. They'll take my money and maybe put me in jail if I don't pay the tax, but the level of benefits is entirely up to Congress. > Why is my house ownership deed more binding than, say, the legal > responsibility of the Fed to ensure the "full employment" of the labor > force? Well for one there's no definition of full employment in law or practice, while the rights and responsibilities of house ownership are well-defined. The working definition would be something like the lowest rate of unemployment consistent with price stability - but price stability isn't defined either. I think the CBO has "full employment" somewhere around 5.5% unemployment. The Fed's latest long-run projection is 5.2-5.6% <http://www.federalreserve.gov/newsevents/press/monetary/fomcprojtabl20110427.pdf>. The Fed's official take: http://www.federalreserve.gov/faqs/money_12848.htm > The Congress established two key objectives for monetary policy--maximum > employment and stable prices--in the Federal Reserve Act. These objectives > are sometimes referred to as the Federal Reserve's dual mandate. The dual > mandate is the long-run goal for monetary policy, and the Congress also > established the Federal Reserve as an independent agency to help ensure that > this monetary policy goal can be achieved. The independence of the Federal > Reserve in conducting monetary policy is critical to guaranteeing that > monetary policy decisions are free from political influence and focused > exclusively on achieving the Federal Reserve's dual mandate. For example, a > problem experienced in many countries without an independent central bank is > that elected officials have put pressure on monetary policymakers to follow > policies that boost the economy in the short run even if doing so would > result in high levels of inflation later on. The Federal Reserve's dual > mandate and the provision! s for the independence of the Federal Reserve are two key factors that help guard against such outcomes in the United States. And the section of the law: http://www.federalreserve.gov/aboutthefed/section2a.htm > The Board of Governors of the Federal Reserve System and the Federal Open > Market Committee shall maintain long run growth of the monetary and credit > aggregates commensurate with the economy's long run potential to increase > production, so as to promote effectively the goals of maximum employment, > stable prices, and moderate long-term interest rates. So they're under no obligation to ensure full employment really. Doug _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
