It’s the Fed’s job to fix the economy. And there’s a lot it could still do.
The economy is in free fall.
About 22 million people — or more than 13 percent of the U.S. labor force — have filed for unemployment in the past four weeks. Economists are projecting unemployment as high as 20 percent within a matter of months. Entire industries, like hotels and airlines, have all but shut down, and the rest of the economy is slowing as people stay indoors and the panic from the coronavirus shock turns into an ongoing recession.
When the economy is collapsing like this, there’s an actor who is supposed to step in: the Federal Reserve.
While Congress occasionally steps in to offer stimulus through tax and spending programs (and it has, though it can do much more), the primary duty of preventing and mitigating recessions in the U.S. rests with the Federal Reserve, which is obligated under federal law to minimize unemployment.
The Fed hasn’t always lived up to that mandate. Despite taking extreme, at times heroic measures to rescue the economy in 2008-’09, the Fed still oversaw a prolonged, painfully slow recovery that took a decade or more to reach full employment again. It continually undershot its inflation target, even as people were suffering from mass joblessness.
To its considerable credit, today’s Fed has been taking aggressive steps to fulfill its mandate, even bigger steps than the financial crisis-era Fed did. Fed Chair Jay Powell has committed trillions of dollars of Fed purchases to combating the coronavirus downturn and making sure businesses have easy access to credit. He has brought interest rates down to zero and taken the unprecedented step of subsidizing state and local governments by buying their bonds…
To read the entire article from Vox, click https://www.vox.com/future-perfect/2020/4/17/21220919/fed-federal-reserve-stimulus-main-street-lending-program
