Jamesian Philosophy Refreshed

 The administration of President Donald Trump has made many of us eager to cheer on virtually any check or balance as it appears, even as we were briefly cheering on the old neoconservatives of and around the Cheney family (yes, the old torture caucus), insofar as it limited Trump's reach. It served a human and humane purpose.  Anyway, the issue of the independence of the Federal Reserve, America's central bank (the third central bank in the history of our country) has come to the fore of late.  The political hack's instinct is often to advance the cause of inflation, in part because it assists net debtors in relieving them of some of the net value of their indebtedness, and that can have stimulative effects in the marketplace and at the ballot box.  Also, if the nation-state itself is a debtor, as the United States certainly is on a world history record-breaking scale, then reducing the value of the currency on which its bonds were issued is a way of getting the ben...

  Powell has done a fine job as chair of the Federal Reserve.  He is under attack, as Fed chairs often come under attack.  President Trump clearly wants an interest rate cut.  POTUS sometimes talks as if such a cut is a nice reward for a well-performing dog. Our economy has "virtually no inflation" he has said, and "is doing really well," so the rate should be cut to 2 percent.  Good dog. Here's the treat.   That is insane.  The economy seems to be avoiding inflation because Powell has kept rates up.  After all, one of the consequences of high rates is to make fixed income instruments, bonds and the like, attractive. Investment in boring long-term bonds is like investment of one's cash in a pillow case.  It is money effectively taken out of circulation -- hence it is a damper on prices.   To be clear, Powell is not holding rates at historically high levels, unless one's historical lens is quite near sighted. Rates are roughly...