Busting The Myth That The Fed Can Control Or Predict The Economy, by Jon Wolfenbarger

Nobody how many times this myth is punctured, it keeps coming back. There’s not a shred of evidence to support the widespread notion that the economy is a puppet dancing on strings controlled by the Federal Reserve. From Jon Wolfenbarger at Bull and Bear Profits via zerohedge.com:

The Federal Reserve states that it “conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy.”

Let’s look at how well the Fed has done that job since its founding in 1913.

Economy And Long-Term Interest Rates

Since 1913, the US unemployment rate has ranged from 2.5% in the early 1950s to 25% during the Great Depression. Inflation has ranged from positive 24% to negative 16%. Inflation is currently 7.9%, well above the Fed’s 2% target. While the Fed has some influence over money supply, they have no control over money demand or how money is spent, which has a significant impact on employment and inflation.

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