Barry Eichengreen: monetary policy rules are a “compass” and no navigator should blindly rely on a compass #hooverfedconference
Orphanides, at #hooverfedconference, calls for a single, inflation-focused mandate for #Fed, and a prohibition of “monetary financing”
By Ann Saphir
PALO ALTO Calif. (Reuters) – The U.S. Federal Reserve does not have the power to fight inflation on its own, a prominent economist said on Thursday, a conclusion that challenges the very bedrock of current Fed thinking.
“Inflation is always and everywhere a fiscal problem,” declared John Cochrane, a professor at the University of Chicago, speaking at Stanford University’s Hoover Institution. “Long-run price stability is a function of the structure of government debt, ﬁscal promises, and ﬁscal commitments. The central bank has only a short-run smoothing role, as it did under the gold standard.”