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William C. Dudley is the amazingly out-of-touch
President of the New York Fed. Speaking in Queens today, he said the economy
has improved, but a long way from improved employment and price stability.
The audience pressed Dudley about higher food
prices, wherein Reuters
reports “people forget that even as the price of food is rising,
other prices are falling. He mentioned the price of the iPad
2, prompting guffaws from the audience.”
This whole commodity price thing is temporary he
said. “While rising commodity prices may be giving some of you a bad
headache, they are not likely to lead to a sustained rise in inflation to
levels inconsistent with our dual mandate,” Dudley said.
After earning his PhD at the University of
California, Dudley worked for the Fed. Then he went to work at Goldman Sachs
where he was the firm’s Chief Economist for a decade. The is was
back the New York branch of the Fed in 2007 and was made CEO in 2009.
Mr. Dudley has plenty of tools over there in the Fed
garage that will keep inflation in check. “We are very, very confident
that those tools will be completely effective at keeping inflation in
check,” he
said late last year defending the Fed’s QE2 policy. “We are
completely willing to use those tools, when the time comes, to prevent an
inflation problem. Higher inflation is not a way out. It is not a
solution.”
“The problem with a price-level target is that
it’s difficult to explain what you’re doing in a way that
doesn’t create larger anxiety about the long-term inflation
target,” he said. “We clearly want people to understand that we
are committed to price stability over the long run.”
The Fed is committed and prices are stable. If you
don’t believe it because the price of your groceries are going up, then
the guys running the Fed would say these price movements are just too
difficult for you to understand.
Doug French
Mises.org
Douglas French is president
of the Mises Institute and author of Early Speculative Bubbles &
Increases in the Money Supply. See his tribute to Murray Rothbard.
Article originally published
on www.Mises.org. By authorization of the
author
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