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Posts Tagged ‘Mandate’

The Fed’s Real Mandate

Posted by M. C. on October 8, 2022

The current “dual” between the two mandates is to reduce price inflation by increasing interest rates to increase unemployment and kill businesses to choke off aggregate demand.

Mark Thornton

The Federal Reserve has a legal dual mandate to minimize unemployment and price inflation. The current “dual” between the two mandates is to reduce price inflation by increasing interest rates to increase unemployment and kill businesses to choke off aggregate demand. This has been the most important economic and investment issue this year and this dual minimization procedure has dominated Fed policy for at least three-quarters of a century.

This is odd given that the Fed is in the business of creating money, the cause of price inflation, and it is responsible for all the largest surges in unemployment since its founding in 1913. Employing an army of monetary economists, macro theorists, and statisticians, the Fed appears to be pursuing its quixotic quest of the Phillips curve sweet spot of minimizing inflation and unemployment.

The real mandate of the Fed is serving its masters, the political elites, by financing government spending and debt, bailing out cronies, and supporting the political process, including the Fed’s own interests. Everything else, including the inflation and unemployment rates are derivative of the primary mandate. The so-called dual mandate is just subterfuge to protect the Fed’s “confidence game.”

The Quest of the False Mandate

In The Fed Explained: What the Central Bank Does, we learn how control of the Fed is “decentralized.” This might sound good to some supporters of the free market. However, any hint of decentralization, such as the importance of District Banks, is long gone and the remnant is merely a diversion or historical curiosity. Of the twelve votes on the Federal Open Market Committee (FOMC) there are only four of twelve rotating District Bank presidents voting, plus the President of the New York Fed. The central Board of Governors in Washington DC has seven voting members who are appointed by the President and confirmed by the Senate and has nearly twice the voting power over interest rate decisions. Plus, the Chairman (Powell) has the power of the bully pulpit and is the consensus builder on the FOMC.

We are also told of the balancing of public and private (banks’) interests controlling the Fed and some free-market supporters latch onto the influence of the private sector as an effective check on the Fed’s enormous economic power. Big banks do work directly with the Fed in “open market operations” and interact in the day-to-day business of banking regulation. Commercial banks have some voting power within the District Banks. However, this influence is contingent on political goals and even the big banks can be pawns in the Fed’s political chess game. Their shares are “nonnegotiable” and are nothing like shares in private corporations. Banking interests are clearly derivative, and the Fed has thrown such interests overboard when necessary, such as with the Savings and Loan Crisis or Lehman Bros. In any case, the union of public and private interests is the ultimate source of corruption and can be the greatest threat to human liberty. Such private interests are clearly not a bulwark of liberty.

It is true that the Federal Reserve Act of 1913 was established and intended to be a cartel device for the banks and some banks are better protected than others. Marx and Engels (1848) called for the establishment of central banks and thereafter Americans were increasingly duped by socialist ideology. This socialist influence was an important force during the so-called Progressive Era (1890–1920). History textbooks make the Federal Reserve Act appear to be the result of a coalition of popular interests. However, the big banks and their academic technocrats controlled by political elites, created and controlled the legislative campaign with their “independent” National Monetary Commission.

A final and critical canard about the Fed is its “independence.” We are told that the Fed must be independent of political power to carry out its mandates and be effective. In this vein, if the Fed were to succumb to political pressures, then it would continually increase the money supply and suppress interest rates below market determined levels, especially before elections. This they tell us would destabilize the economy and might lead to hyperinflation the way it does under dictatorships where central banks do not have independence. I’m sure the Fed would love to be independent, but they are controlled by powerful office holders who are in turn controlled by the elites. As Ryan McMaken reminds us, “Fed independence is a fairy tale academic economists like to tell their students” and they are biased toward the inflationary mandate.

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The Fed’s “Full Employment” Mandate Is a Mandate for Inflation

Posted by M. C. on September 21, 2022

Over time, repeated referenced to “the dual mandate” were really just calls for continued activist monetary policy and even for the wildly experimental “unconventional monetary policy” employed after 2008. 

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Ryan McMaken

In recent years, Congress has attempted to add various new mandates to the Federal Reserve’s mission. In 2020, Democrats introduced the “Federal Reserve Racial and Economic Equity Act.”  Then, in 2021, pundits and politicians were telling us that it’s the Fed’s job to “combat climate change.” These are just the latest efforts to use the enormously powerful central bank to achieve political ends to the liking of elected officials.

This is a helpful reminder, of course, that the Fed is not independent from politics. The Federal Reserve has never been politically independent, and it certainly isn’t so now. Fed independence is a fairy tale academic economists like to tell their students. The debate over new mandates has also highlighted the fact the Fed already has no fewer than three mandates explicitly written into law: moderate long term interest rates, maximum employment, and stable prices

In practice, however, the Fed has only two mandates because the Fed is so limited in what it can do to target long term interest rates in a global marketplace. This has led to what is now a de facto “dual mandate.” 

This dual mandate is now all about maximizing employment while also maintaining “stable prices.” What this all means is never precisely spelled out in policy or law. It also changes over time. zero-percent CPI inflation was once the goal. Now the goal is the arbitrary two-percent standard. Similarly, what is meant by “maximum employment” is subject to the arbitrary definition of “full employment.”

In any case, it has been the view of central bankers for decades that one of the easiest ways to “maximize” employment is to embrace accommodative monetary policy. This, however, works counter to the mandate of stable prices by inflating the money supply. This leads to price inflation in the medium to long term. 

So, the two mandates are essentially at odds. So which half of the mandate to focus on or emphasize? That’s up to the Fed. 

In practice, however, experience suggests that the Fed tends strongly toward embracing the “maximum employment” side of the equation. Time and time again, central bankers have chosen to downplay the stable-prices mandate and embrace expansive monetary policy. 

How the Fed Favors Maximum Employment 

As a de facto instrument of the federal government, Federal Reserve policy tends to focus on what the federal government focuses on. So, the Fed was moved in the direction of greater focus on employment with the passage of the Employment Act of 1946. The Act stated

The Congress hereby declares that it is the continuing policy and responsibility of the federal government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy with the assistance and cooperation of industry, agriculture, labor, and state and local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free and competitive enterprise and the general welfare, conditions under which there will be afforded useful employment for those able, willing, and seeking work, and to promote maximum employment, production, and purchasing power.

Although highly controversial at the time, the belief that the federal government ought to intervene to maximize employment—whether through fiscal or monetary policy—became well accepted over time. In terms of Fed policy following the adoption of the act, Allan Meltzer—author of a huge history of the Federal Reserve—concludes that “Interpretations of the 1946 Employment Act usually emphasized primacy of full employment.” In other words, the bias was in favor of easy money and intervention designed to stimulate the economy so as to ensure higher employment numbers. 

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Biden Voters’ Remorse | Chronicles

Posted by M. C. on February 5, 2022

It was invented by those who willfully ignored what he said because they hated Trump or because they agreed with Biden’s proposals at the time that he made them. Those who supported him deserve our stern disapproval rather than inappropriate expressions of sympathy.–remorse/1/

By Paul Gottfried


There seems to be a widespread belief that Joe Biden has exceeded the mandate for which he was elected. It seems we’re supposed to believe that those who voted for the Biden-Harris ticket craved moderation after Trump’s troubled and unsettling presidency. Writer and commentator Scott Jennings repeats this familiar narrative in a recent interview with CNN:

I never imagined how quickly this would all unfold. The person they sold on the campaign, the nice old, you know, moderate grandpa who just wanted to help everybody get along and compromise is not what we got over the last year.

He has no mandate really to do much of anything. It’s amazing that he got a couple of things done when the mandate was really pretty clear—50/50 Senate, a near 50/50 House and a pretty close presidential election. The mandate was simply replace Donald Trump and don’t do anything drastic or stupid.

Biden’s voters apparently just wanted a “moderate grandpa” who would lower the political temperature. Instead, they ended up with the agenda of the radical left “Squad” being carried out by a cognitively declining figurehead president. Those who mistakenly supported Biden are now suffering buyer’s remorse, and it would be unfair, we are led to believe, if we blamed these misled voters for what befell them after Biden’s election, the consequences of which they could not have foreseen.

Allow me to respectfully disagree. There were more than enough signs that Biden would derail the country when he was running against Trump; and those who voted for him are guilty of having ignored the evidence that Biden would be a far worse president than the person he replaced.

I long ago stopped believing that those who vote for catastrophic political candidates are simply the victims of bad choices. Such people get what they want—or what they think they want—and should be scolded for imposing their will on the rest of us. When I went with my parents to a restaurant as a child and ordered something that I didn’t like—usually against better advice—I was made to eat what I picked. It was my misjudgment, not the small print on the menu, which caused me to choose badly. We are now dealing with chronological adults who picked the wrong fare out of obstinacy or anger, but who still insist that it was someone else’s fault. 

Biden hardly ran as a moderate. His vice-presidential candidate openly expressed support for Black Lives Matter violence during the 2020 “Summer of Love,” and Biden’s staff were involved in bailing out the criminal participants in those riots. While preparing their separate presidential runs in 2019, both Biden and Harris came out in support of the race-hustling impostor Jussie Smollett. Each treated Smollett’s make-believe attack by Trump supporters in downtown Chicago at 2:00 am as evidence of raging racism and homophobia

The Biden/Harris Campaign also decried Kyle Rittenhouse as a racist for defending himself against armed assailants (who happened to be white) in Kenosha, Wisconsin, in 2020. Biden then expressed anger and concern at Rittenhouse’s acquittal in 2021 in much the same language he had used against him in the past. Never during or after his campaign did Biden stop appealing to his radical black and LGBT base.

“We have a lot to root out, but most of all the systematic racism that most of us whites don’t like to acknowledge even exists,” Biden said in a 2019 speech delivered for Al Sharpton and the National Action Network. Within one day of Biden’s taking office, Manhattan Institute fellow Heather Mac Donald notes in a Newsweek article that Biden pledged to fight systemic white racism with the assistance of all branches of the federal government and to give amnesty to illegals. Neither theme was new; both issues had furnished the incoming president with campaign rhetoric for many months.   

Moreover, Biden’s open-border policy, which voters are now complaining about, did not result from a post-election decision by the new president. It is exactly what he promised to do while on the campaign trail. He also promised in the spring of 2020 to close the Keystone XL oil pipeline bringing in oil exports from Canada. Thus, his action to do so immediately after he became president should not have surprised anyone who was paying any attention to national politics.

Biden was every bit as forthcoming about his presidential plans as Trump had been about his own, four years earlier. The idea that Biden hid his intentions when running for the presidency is utter nonsense. It was invented by those who willfully ignored what he said because they hated Trump or because they agreed with Biden’s proposals at the time that he made them. Those who supported him deserve our stern disapproval rather than inappropriate expressions of sympathy.

Paul Gottfried

Paul Gottfried is editor in chief of Chronicles: A Magazine of American Culture. He is also the Raffensperger Professor of Humanities Emeritus at Elizabethtown College, where he taught for 25 years, a Guggenheim recipient, and a Yale Ph.D. He is the author of 13 books, most recently Fascism: Career of a Concept and Revisions and Dissents.

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Watch “Biden’s Mad Mandate Is Ripping The Country To Shreds” on YouTube

Posted by M. C. on October 21, 2021

Nuclear scientists dismissed. First responders booted. Doctors and nurses axed. Pilots put on leave. And Biden’s “mandate” has not even been promulgated by OSHA. The country is being ripped apart…and that may be just what they want. Meanwhile, Biden’s numbers continue an express elevator downward. What’s the end game?

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Pelosi’s “Mandate”: What “Consent of the Governed” Really Means | Mises Wire

Posted by M. C. on December 23, 2020

So, even if we define “the governed” or “the people” as merely the adults—most of whom presumably pay taxes, by the way—then neither Biden nor Trump managed to even get a plurality, let alone a majority. The plurality of these American adults chose to vote for neither of these candidates.

The plurality of people did not bother. Disdain, ignorance, apathy…?

Ryan McMaken

The 2020 election failed to live up to the projections of many pollsters and Democratic strategists. The predicted landslide failed to materialize, and the Democrats lost seats in the House. This means in 2022 the Democrats will be defending a razor-thin majority in the House—a majority they’re almost certain to lose in a midterm election if Biden is the final victor. The Democrats did well. But not that well.

Nonetheless, Nancy Pelosi in the days following the election reportedly declared the Democrats “have a mandate!” But do they?


Let’s consider what constitutes a democratic victory given the standard handed down to us by pundits and politicians on the left. According to the current narrative, the legitimacy of a president’s electoral victory depends on the number of votes he receives through the “popular vote.” That is, when it comes to votes from the overall national population, the candidate with a majority—or a plurality, depending on the standard one is using—ought to be declared the victor.

At this time, it appears the popular vote doesn’t exactly scream “landslide” for the presumed winner, Biden, no matter how you look at it. Biden’s popular election tally in 2020—as in most presidential contests—failed to get much more than a bare majority. This time, it came in at slightly above 51 percent, according to the government’s numbers.

In other words, nearly half of those who voted, voted against Biden.

Only in Washington could anyone spin this as a “mandate” to rule in whatever manner the Democrats wish. The US Senate, of course—no matter how Georgia’s runoff elections go—will be about evenly divided. In the House of Representatives, the Democrats will, at best, capture 51 percent of all seats.

The Consent of the Governed?

The vulgar version of democratic theory generally used by Washington politicians and the US news media stipulates that whichever party (or coalition of parties) receives a majority of votes has the consent of the governed.

Yet, “the governed” does not include merely those who voted in the election. It’s problematic enough that the 51 percent who voted for the victors gets to rule over the 49 percent who voted for someone else. But in this scenario we’re not only talking about people who actually voted. After all, it’s not just active voters who are subject to the laws and diktats of the regime.

So, how many of “the governed” have actually voted for Joe Biden?

If we look to the population in its entirety, the percentage who have signed off on a Biden presidency is rather small. Out of the 330 million residents in the United States—a group we can plausibly refer to as “the governed,” 81 million of them reportedly voted for Biden. That comes to around 24 percent of the total.

At the same time, about 22 percent of the whole population voted for Donald Trump. That means 53 percent of “the governed” either voted for someone other than Trump or Biden, or didn’t vote at all. It also means about 75 percent of the population did not vote for Biden. 


It’s hard to spin this as a case of “the people” signing off on the Democratic Party’s—or any party’s—agenda.

Some might take exception to this on the grounds that I’ve included children in the total. Of course, some hard-core small-d democrats on the left insist that children should indeed get to vote.  And given that today’s children will be paying trillions of dollars in interest on today’s national debt, it’s not as if children are irrelevant. But for the sake of argument, let’s include only the adult population among “the governed.” 

According to the Federal Register, the “estimated voting age population” in the United States as of 2019 was 255 million. That’s just people over 18. 

What proportion of the adult population cast a vote for Joe Biden?

The answer is 31 percent, or less than one-third. The total for Donald Trump was 29 percent, according to the official account. That means nearly 40 percent of eligible voters either voted for someone else, or didn’t vote at all. It also means nearly 69 percent of voting-age Americans did not vote for Biden. 


So, even if we define “the governed” or “the people” as merely the adults—most of whom presumably pay taxes, by the way—then neither Biden nor Trump managed to even get a plurality, let alone a majority. The plurality of these American adults chose to vote for neither of these candidates.

In the actual US electoral system, of course, one clearly does not need to obtain a majority of the popular vote to win. The legal victor is whoever gets the most electoral votes, regardless of how many eligible voters participate. Many presidents have won the presidency—e.g., Bill Clinton, John F. Kennedy—without ever winning a majority of votes cast.

Yet the popular narrative underlying pundits’ and politicians’ appeal to democracy is that winners obtain moral legitimacy—not to be confused with legal authority—by “getting the most votes.” We see, however, that more often than not a majority of the adult population—and a lopsided majority of the overall population—never casts a vote for the victor.

Moreover, there is no reason to assume that those who voted for the winner all did so for the same reason. Do all of the tens of millions of Biden voters or Trump voters cast their votes with identical policy preferences in mind? It’s clear they do not and have not. Thus, there can be no mandate, and it would be nonsensical to conclude that it is even possible that the electoral victor, in the face of such a large and diverse voting population, can “represent” his constituents in any meaningful way.

But old myths of democracy die hard, and the winners in contests like the 2020 election will predictably spin their victories as a type of democratic mandate while portraying themselves as the instrument of “the will of the people.” Many Americans will believe them.


Contact Ryan McMaken

Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and The Austrian, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado and was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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