The Fed has several jobs. The long-term one overrides all: stable purchasing power in the dollar — which means neither excessive inflation nor deflation, a target of 2 percent annual inflation (much lower is as damaging as much higher). The Fed’s second job: try to maintain a stable economy — raise the cost of money if the economy is too hot, or cut the cost if too cold. Then there are the temporary jobs, fire-fighting: maintaining orderly markets, without either bubbles or crashes; and a new job after the 2008 disaster, to be the nation’s credit regulator, watchful that credit standards are neither too easy nor too tight. Many people are suspicious of the Fed or government in general. Can the Fed do these jobs? Yes, but they’ll blow it from time to time, too — and even though they do, we’re a great deal better off with the Fed trying than not. Inflation still well below target Back to the Fed’s Job No. 1 with a bullet. Confounding all economists’ models, and commo…
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