What is the first thing anyone expects of individuals, in order to "fit in" or remain connected? Consistency is needed, in order to follow through on one's commitments and responsibilities. This is important for relationships of all kinds, at least to the degree one can deliver. What's more, some aspects of life make consistency even more difficult than it should be - especially for those who may experience lower stress tolerance at the outset. Time choice options are important for all income levels: not just for personal maintenance, but numerous other elements of maintenance as well. In spite of increasing automation, technology is always going to demand plenty of personal time and human attention.
Often, mechanical "bodies" and human bodies break down or otherwise malfunction at inopportune moments. Time coordination can be all the more difficult, for those who don't have extra time options already built into income capacity. The goal in anyone's circumstance is to make certain expected sets of activity flows remain possible, and that primary functions continue to provide what is necessary for the process. Time flows and process flows work together in sync, so as to stay in motion.
Monetary policy has these same consistency issues, even if not all Fed members seem cognizant of the process. If that were not enough, too many economists are also reluctant to acknowledge the vital role of monetary consistency. When monetary flows don't accurately reflect ongoing spending patterns, entire populations can suffer the consequence. Indeed, if aggregate spending capacity could be summed up in a single word, consistency would likely suffice. Yet how many governments or policy makers are now willing to acknowledge this simple fact to their own citizens?
As a result, citizens suspect the Fed of being inconsistent, but they don't know how or in what capacity. As Bonnie Carr recently indicated, Janet Yellen has also been reluctant to discuss the benefit of monetary rules with the public in a general sense. The casual observer knows that Fed actions don't seem normal - hence suspects Fed discretion isn't quite to be trusted - but can't pinpoint exactly why.
Perhaps Yellen is reluctant to be forthcoming about monetary policy roles, because so many around her wish to break with the economic consistencies of the past. Only there's one problem with this gradual deflationary approach. Even more societal commitments and obligations will continue to go by the wayside. How many millions more will appear as though "irresponsible", because of irresponsibility at national levels?
If Janet Yellen has become "nervous" as to her dilemma - hey, I can relate. Who isn't a little nervous about the "big picture" right now? For example, I have a "nervous" cat. My Dad teased her by describing her thus this morning, as she asked for food I suspected she wouldn't eat. Even though I've managed to be there for her the past sixteen years, she knows there were times my ability to "follow through" was questionable. Perhaps that is lodged into her mind!
And yesterday was one of those days, when remaining consistent was everything Dad and I could manage. The plumbers had just completed a repair job in the second bathroom, and Dad was making repairs to part of the wall afterward, so I left for the grocery store. When I returned, the washing machine had overflowed - not just in the garage, but water was running out the front and back of the garage as well. Even though the garage contents were reasonably neat, water was pooling under some areas where cleaning would be a problem. Specifically, there were lots of plywood and particle boards which had been saved after a hurricane, in case they were needed in the event of another direct hit on the area.
It took a couple of hours to get the garage reasonably dry and clean, and I wasn't even ready to debate whether the washing machine was a total loss. First, there was the matter of a battery that was in the process of quickly going down in my four month old laptop. What I didn't realize was the fact that battery issues - like any number of other computer "problems" - can often be resolved by jiggling the connections and making sure the wall connection is still good. Even though it was great to discover my laptop was fine, the "not knowing" part meant more rushing around in an already full day. Fortunately I was able to keep it together and "stay consistent".
That's all anyone really needs the Fed to do. Is that too much to expect? After all, personal efforts of many individuals to keep it all together, may not necessarily affect many others. Unfortunately that's not true for the Fed, because millions rely on the Fed to be responsible so that they are able to remain responsible as well.
Economies are still in need of the monetary assistance that only central bankers can provide. Monetary policy authorities need to back away from their firefighter roles. They need to quit fretting over financial issues and learn to let financial institutions do a better job of taking care of their own responsibilities. The Fed needs to maintain a more consistent monetary role, as the Bridge Over Troubled Waters which people actually need. Now, hopefully today nothing breaks...
P.S. Of course, some onlookers such as Justin Fox just think the Fed is "weird" and that people should "get over it". If only it were that simple!
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