Wall Street Journal Letter to the Editor on Federal Reserve Policy

The Wall Street Journal published my Letter to the Editor on Federal Reserve policy:

Regarding James Grant’s “Powell Has Become the Fed’s Dr. Feelgood” (op-ed, June 29): It seems that the author is suggesting that the Federal Reserve should abandon its congressional mandate of conducting monetary policy to achieve the dual objective of maximum employment and price stability. The Fed’s expansion of its balance sheet, along with parallel actions taken by Congress and the Treasury, has facilitated the stabilizing of the U.S. economy by plugging the hole of substantially reduced demand by consumers resulting from the Covid-19 induced lockdowns. This effort by the Federal Reserve is intended to prevent the current recession with the highest unemployment since the 1930s from becoming the Great Virus Depression. The Federal Reserve is applying the lessons learned from the restrictive monetary policy of the 1930s and the accommodative policy to address the Great Recession of 2007-09.

Prof. David I. Kass

University of Maryland

College Park, Md.