The image is the lead for a National Review piece titled President Obama’s Che Moment, an article concerning, among other things, President Barack Obama’s (D) participation in a wreath-laying ceremony at the Jose Marti Memorial in Havana during his recent trip to Cuba.
[A]s the central banks become more desperate to boost inflation and growth, they are starting to break one of the modern tenets of the profession by funneling that cash directly to what they regard as “good” uses.
…
The Bank of Japan’s conditions for companies to qualify for exchange-traded funds it would like to buy sound like they come from a well-meaning government minister…. Companies could qualify by offering an “improving working environment, providing child-care support, or expanding employee-training programs.”
And
Consider the ECB. It plans to pay banks to borrow from it for up to four years so long as they use the money to help the “real” economy
rather than use the money for explicitly, specifically sound business reasons. With the “help” and the “real economy” bits defined by the Central Planner Bank.
However, as James Mackintosh put it in his Wall Street Journal article at the link,
All these are eminently reasonable things to demand of companies, especially Japanese firms. All would probably be good for the economy, too.
However, they have nothing to do with monetary policy. The basic aim of central banks is to adjust the overall economy while leaving the market and government to decide the best use of capital, decisions that are inherently political.
To paraphrase a man from a different venue, the way to combat inflation is to combat inflation. Set the benchmark interest rates at levels historically consistent with the Fed’s target inflation rate, and then leave them alone. Let the free market fluctuate around them as it will: the market—the invisible hand—knows best what the appropriate allocation of resources is; neither any central bank nor any other central planner can ever know that.
Or is it just narcissism?
President Obama sought to increase the amount of money available for the federal government to spend on former presidents in advance of his White House exit.
In his budget requests for fiscal years 2016 and 2017, Obama proposed hikes in the appropriations for expenditures of former presidents….
To the tune of a $600,000 increase—18%—in this spending. No doubt the job of President is stressful; one has only to look at how much the last two—Bush the Younger and Obama, both relatively young men on their first election—aged over their mere eight years in office. But none of this increase, nor any of the baseline of roughly $3.2 million, is intended to cover health related costs. No, the money is intended for life style, protection details, libraries, and the like.
Notice, too that no existing ex-President has asked for an increase in such monies, not Jimmie Carter with his health problems, not Bush the Elder and his age-related health problems, not Bill Clinton, not Bush the Younger. Only Obama wants more money, and he’s not even ex yet, just preparing to be.
Hmm….
EPA Region 5 Administrator Susan Hedman, who resigned in February, explained to Congress on Tuesday that “during the summer and fall of 2015 the Region 5 Flint team actively evaluated and reevaluated the enforcement options available.” But she chose not to intervene in September because she worried that the Michigan Attorney General might sue the agency. When have legal risks ever stopped the EPA?
The Wall Street Journal has a valid question. But both the editorial staff and the EPA ignore another matter: the publicity of a Michigan AG lawsuit against the EPA would have resulted in a high level of public oversight of the EPA, of the Michigan Department of Environmental Quality, and of Flint’s tap water.
I’ve written before about the costs of the Fed’s artificially suppressed interest rates.
Here’s another cost.
Life-insurance companies are scouring their policies to identify ways to raise rates and fees and lower the amount of interest they have to pay on savings products as low interest rates cut into their profits.
The bottom line for policyholders is they have to pay up or relinquish benefits.
The main culprit: the Federal Reserve’s seven-year-old campaign to boost the economy. Life insurers earn much of their profit by investing customers’ premiums in bonds until claims come due. They have typically favored high-quality, long-term corporate bonds to meet regulatory requirements to back their obligations with safe investments. As the Fed began driving down rates in 2008 to rescue the economy from a global meltdown, the yield on corporate bonds has tumbled.
It isn’t just widows and orphans, and anyone else forced by circumstance into fixed-income devices for their money who are harmed by the Fed’s interest rate suppression; it’s everyone.
A concrete example is a retired school teacher who’s a long-term care policy holder. Because of the Fed’s shenanigans, her insurer had to offer her, consistent with the above cite, a lower payout in return for keeping her annual premium fixed at $4,000. Those $4k might seem like a lot or a little, but here’s how an interest rate regime might impact that premium.
In the first place, a market interest rate regime, instead of the Fed’s suppressed rates, likely would have let the insurer leave the terms of this policy holder’s contract intact.
In the second place, a market rate of return for the policy holder’s savings/investment money—let’s say she could get 5% in a free market—would require a savings size of just $80,000 to throw off enough income to cover her premium. At today’s deliberately low rate of around 2%, she needs savings of $250,000 to get the income to cover her premium.
It’s time for the Fed to get out of the way of the market and to return to its knitting: maintaining price stability—a steady inflation rate—and full employment (which it doesn’t need to do directly, as that falls out of a steady inflation rate). And that steady inflation rate itself demands the Fed at least rraise its benchmark rates to levels consistent with its own target of 2% inflation.