What economic theory does the Fed operate under? (agent, credit, sell)

[jimhcom]

Of the these three economic theories, Austrian, Keynesian, and MMT, which do you feel most closely reflects the one the Fed is actually operating under?
Do you think our current theory is working well, or would you change it if you were in charge.
Apologies for the typo... can't correct it.

[MrRational]

Originally Posted by jimhcom

Of the these three economic theories, Austrian, Keynesian, and MMT,
which do you feel most closely reflects the one the Fed is actually operating under?

Add #4) Magic 8 Ball

[shaker281]

Originally Posted by MrRational

Add #4) Magic 8 Ball

OK, beat me to it!

So, I'll go with, "Try it, you'll like it!"

[oaktonite]

Well, no points for any of our players so far, including the one who was silly enough to ask the original question.

[jimhcom]

Originally Posted by oaktonite

Well, no points for any of our players so far, including the one who was silly enough to ask the original question.

I thought that at least some of the people here who pretend to understand economics would be capable of understanding the question, but as I am discovering the depth of education here is somewhat less than I had hoped.

[cdelena]

Originally Posted by MrRational

Add #4) Magic 8 Ball

Yup. Whatever looks like it will keep me out of hot water till I am out of this office.

[cpg35223]

Evidently, a chimp with a spinner.

BERNANKE: "Okay, WonderChimp, let's see how long we'll do QE now. Ready, Chimp?"

WONDERCHIMP: "OooookOoookAhhhAhhhh..." [Spinning noises]

FLUNKY: "Mr. Chairman, the spinner is stuck between 'Slash Interest Rates' and 'Issue vague wordy proclamation that the economy is on the right track.'"

BERNANKE: "Well, I guess we do both, then. Thanks, WonderChimp! Here's a banana!"

WONDERCHIMP: "OokOokOokOok."

[celcius]

Keynesian. QE is inherently Keynesian and Ben has, to me, generally shown Keynesian tendencies.

I wouldn't change a thing about Fed policy. My attention on change would be focused towards business investment, cash hoarding and credit deleveraging.

[oaktonite]

Originally Posted by jimhcom

I thought that at least some of the people here who pretend to understand economics would be capable of understanding the question, but as I am discovering the depth of education here is somewhat less than I had hoped.

Really? The Heritage Foundation hues to what might be called an economic theory. So does the Mises Institute. But these are mere propagagnda mills. They are not serious enterprises under any legitimate understanding of the term. The Fed is quite different. It is not out to prove anything, to sell anything, or to help get anyone elected or unelected. The tasks of the Fed are to maintain long-run growth in monetary and credit aggregates commensurate with the economy's long-run potential to increase production, and to promote the goals of maximum employment, stable prices, and moderate long-term interest rates. You can't do that with stupid theory. The Fed uses the broad range of its skills and experiences to develop and implement policies that support those missions. modfiying and updating them as changing real-world conditions may warrant or dictate. What "econmomic theory" do you think that is?

[A Common Anomaly]

I would lean towards monetarist, but both monetarist and Keynesian monetary policy are largely demand side management. While Bernanke may lean more towards a monetarist school of monetary thought, he has called on the President and Congress to do more, essentially invoking Keynesian fiscal policy to accommodate his loose monetary policy. I agree with him. The main culprit holding back recovery are Congressional Republicans.

As far as I am concerned, Bernanke is the only responsible macro economic agent. Without the expansionary policy the Fed has been conducting, the economy would be in worse shape.

Congress and the President are failing to live up to their half of the Full Employment Act of 1946. While Obama and the Dems are not beating the drum loud enough on what to do, Republicans are selfishly concerned about themselves and would rather obstruct for the sake of obstructing.

There is only so much that the Fed can do being stuck at a ZLB interest rate. The only other tool in they have is capping or fining ER, which I don't believe is a tool that they should use.