Proactively isn't the term I would use. The stock market had already SHARPLY corrected from late February to late March, 2020, and bond/note/bill yields had collapsed so the FED -as usual- reacted to what the market had already done. Because rates were already historically low, and the COVID panic caused them to crash back to near zero, the major monetary move by FED was another round of QE started around the March lows. That's what stabilized the markets and stock indexes made a low on that day if memory serves. Even your Brookings link says the same if you read between the lines.
Then came all of the unnecessary stimulus bills (some of which are now proven to have had historic levels of fraud), due to all of the unnecessary lockdowns. So that's the economic part of the clusterphuck. But it gets much worse with isolation, kids trying to remotely learn, people not getting normal medical screenings, etc. Some states and countries handled this much better. China gets an F grade imo. USSA a D but that grade could range from As to many Fs depending on the state, imo.
With dual mandate and "data driven" mindset the FED can never be proactive, imo. They're reactive by design. Truly free markets scare them or else why must they insist on interfering with the short term price of dollar debt? Thankfully there's still a very large and deep FED FUNDS futures market that they mostly follow. If that ever diminished or went away that's my tell to avoid most types of dollars savings in American banks. Americans should want a strong and independent FED per its original design of lender of last resort, without the modern interventionism related to dual mandate, and more recently implicit support of asset prices. But the latter phrase gets to a more complex issue of how bank credit is internally created and how that credit is used, namely for productive investment, or asset investment. fwiw. |
