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The Fed’s ‘Gain of Function’ Monetary Policy (WSJ, Bessent)www.wsj.com/opinion/the-feds-gain-of-function-monetary-policy-ac0dc38a
438 sats \ 11 comments \ @optimism 6 Sep econ
As we saw during the Covid pandemic, lab-created experiments can wreak havoc when they escape their confines. Once released, they can’t easily be put back. The “extraordinary” monetary-policy tools unleashed after the 2008 financial crisis have similarly transformed the Federal Reserve’s policy regime, with unpredictable consequences.
The Fed’s new operating model is effectively a gain-of-function monetary policy experiment. Overuse of nonstandard policies, mission creep and institutional bloat threaten the central bank’s independence. The Fed must change course. Its standard tool kit has become too complex to manage, with uncertain theoretical underpinnings. Simple and measurable tools, aimed at a narrow mandate, are the clearest way to deliver better outcomes and safeguard central-bank independence over time.
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By failing to deliver on its inflation mandate, the Fed allowed class and generational disparities to widen.

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100 sats \ 8 replies \ @Undisciplined 6 Sep
They still don't get it. The best way to "deliver better outcomes" is to abolish central banking and let markets determine prices.
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42 sats \ 6 replies \ @optimism OP 6 Sep
I think you're right, but I'd argue that narrower mandate is a step in the right direction if you're an evolutionist rather than a revolutionist though, right? If they would end the Fed today with a pen stroke, then what? Panic?
The establishment profiting off policy at the cost of starters that missed out is in abstract how I've felt about the ZIRP stuff (which fwiw was even worse in the EU than in the US - I was endlessly pitched on taking loans every time I needed my banker to take care of something for me (and scolded about Bitcoin)) and I like that I can find agreement with Bessent, whom I generally don't appreciate much.
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100 sats \ 5 replies \ @Undisciplined 6 Sep
I'm all for whatever movement in the right direction we can get.
Yes, there would be an enormous acute panic if the Fed were abolished. But, then the economic correction could really begin. Everything else is some form of kicking the can down the road.
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42 sats \ 4 replies \ @optimism OP 6 Sep
The counterargument to that is that you'd create enormous weakness in the West, and in the East, I'd be surprised if there isn't a constantly updated playbook of how to exploit such a situation, that will be guaranteed to be executed.
The main question on my mind these past years has been: is Bitcoin still for the people like it was the first decade? Or is it, since Foundry/ETFs/Treasury scams, no longer just for the people? If the former, then honeybadger dgaf about the printers. If the latter, then honeybadger better stay in shape and find ways to actively decouple from the establishment.
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100 sats \ 2 replies \ @daolin 22h
Bitcoin protects its users if they know how to use it. It doesn't judge whether you're a high ranking official bailing on the old system, or a former victim of it that never supported it, it only demands that you submit to the new rules.
My guess is that normies scramble for the ETF's at higher prices and with higher leverage until a dip in price triggers an issue with withdrawals. The price crashes below $1 million and critics gloat that Bitcoin failed.
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8 sats \ 1 reply \ @optimism OP 22h
More likely their ETF IOUs turns out to have been a fractional reserve vehicle. Bankers be banking.
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100 sats \ 0 replies \ @daolin 20h
You and I know that. I was thinking of what the vague and misleading headlines will look like.
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100 sats \ 0 replies \ @Undisciplined 6 Sep
I'm confident that it's the latter. Early on, bitcoin was too irrelevant to meaningfully be "for the people". Now, it's too relevant to just be "for the people".
I don't think it matters, though. It's the tool that will bring down the corrupt monetary system and they can't change that fact.
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100 sats \ 0 replies \ @justin_shocknet 23h
Bessent absolutely gets it.
Thinking they can just turn it off overnight is naive armchair quarterbacking, and not "getting it".
How do you trap a dangerous animal?
Do you attack it from the front? Do you signal ahead of time you will be attacking? How do you protect bystanders?
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100 sats \ 1 reply \ @Scoresby 6 Sep
I like the comparison to a lab experiment that has escaped confinement. The economy is not a static thing. It's alive and reactive. Not only does using a tool have a consequence, but such use changes how people behave it changes the economy.
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102 sats \ 0 replies \ @optimism OP 6 Sep
Not only does using a tool have a consequence, but such using it changes how people behave it changes the economy.
Yes! I've always felt that this is the main benefit of Bitcoin, even though I'm extremely nervous for what money manipulators, be it the Fed or Saylor, will ultimately cause - I'm still part-time studying the collapse of the gold standard to learn every detail of it.
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