I've noticed a change in the language that Fed Chairman Bernanke has been using in his latest communications.
For years now, the Fed's "Dual Mandate" has usually been described by economic pundits and the Fed officials themselves as "full employment and price stability".
But that has never been the actual language in the Federal Reserve Act. The Federal Reserve Act reads as the following:
Section 2A. Monetary Policy Objectives
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.So it has never been "full employment and price stability", (or even a dual mandate for that matter as it looks like a triune mandate to me and they're not meeting any of them). It is "maximum employment", "stable prices", and "moderate long-term interest rates".
So I've noticed that as of their Jan 20th release on the report format of future path of policy interest rates, they put it this way:
Appropriate monetary policy, by definition, is the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her interpretation of the Federal Reserve’s dual objectives of maximum employment and stable prices.Then in their regular FOMC release of Jan 25th they wrote:
The FOMC is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates.Then in the Chaiman's Congressional testimony last week this from Bernanke's opening statement:
following its January meeting the FOMC released a statement intended to provide greater clarity about the Committee's longer-term goals and policy strategy.1 The statement begins by emphasizing the Federal Reserve's firm commitment to pursue its congressional mandate to foster stable prices and maximum employment.Maybe the Chairman has finally read the Federal Reserve Act.
Or the FOMC is changing it's approach to how it sees it's own fulfillment of it's statutory mandate as it relates to employment, and is now talking about what is termed by the FRA "maximum" employment, instead of the past used, more colloquial "full" employment phraseology. I believe this word-smithing is a subtle part of a changing Fed policy towards "throwing in the towel" and it's acceptance of continuing high levels of unemployment.
This is a failed Fed Monetary Policy; and Bernanke should just stop talking about Fiscal Policy altogether as he has no lawful mandate wrt Fiscal and he continues to misinform Congress on the nature of U.S. Fiscal Policy which is leading to more apathy and indecision by Congress (as if they needed any prodding!)