The cribbed doctrines of the Federal Reserve must also be challenged. The inflation target should be higher and preemptive wars against inflation should be discarded.
Congress could revise the Federal Reserve's mandate to emphasize running the economy at full employment with rising wages and moderate inflation. Progressives should follow the lead of Fed Up, the project of the Center for Popular Democracy, and challenge appointments to Federal Reserve and its member banks, demanding greater representation of workers, consumers and poverty advocates.
The Fed's decisions aren't technical but rather intensely political, as a statement of values. If the Fed's much-touted independence can be used to support wealthy bondholders and not workers, why should voters put up with it? Let presidents appoint the governors like they appoint cabinet members, and let voters hold the president accountable for the results.
For now, the recent tax cuts and the budget deal are likely to produce a $1 trillion annual deficit in coming year while stimulating an economy that is already growing with relatively low unemployment. The question is whether the Federal Reserve will hold its fire, ignore the bankers on Wall Street, and allow wages to rise, even if inflation begins to creep up. Is the system really so rigged that workers can't get wage hikes even in a full-employment economy? We are about to find out.
Cross-posted from The Nation
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