I think the ECB is wrong not to concentrate on money-supply and credit growth and I think leaving credit growth to dominant European banks is not in the best interest of the Euro-zone.
So if part of the Fed's mandate is to concentrate on growing monetary and credit aggregates, why not keep looking at M3?
boddi
On 11/18/05, Doug Henwood <dhenwood at panix.com> wrote:
> Charles Brown wrote:
>
> > What does the Fed "itself" have as its purpose and goal ? To maximize
> >income for the rich ? When it attempts to influence the economy , what is
> >its goal ?
>
> Its statutory responsibility is
> <http://federalreserve.gov/generalinfo/fract/sect02a.htm>:
>
> >The Board of Governors of the Federal Reserve System and the Federal
> >Open Market Committee shall maintain long run growth of the monetary
> >and credit aggregates commensurate with the economy's long run
> >potential to increase production, so as to promote effectively the
> >goals of maximum employment, stable prices, and moderate long-term
> >interest rates.
>
> By contrast, the European Central Bank's only mandate is price
> stability. And the difference shows in the practice of the two
> institutions.
>
> In practice, the Fed won't allow the labor market to get so tight
> that labor gains the upper hand in bargaining with capital. That
> means provoking recessions to restore enough slack to keep capital on
> top. But they wouldn't tolerate, as the ECB does, 8-10% unemployment
> rates either. No one could seriously accuse Greenspan of running an
> austere ship over the last 17 years. So, if I had to boil it down to
> a phrase, I'd say that their mission is to maintain the status quo of
> the American class structure.
>
> Doug
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