A Metaphor of the Fed

The predicament of the Federal Reserve’s chairman reminds James Grant, a former gunnery mate in the United States Navy, of the fellow with one foot in a rowboat and one foot on the dock up to which the boat is tied — but not tautly. The hapless landlubber, Mr. Grant, the editor of the Interest Rate Observer, tells our Luke Funk, tries to avoid toppling into the water, while also avoiding suffering grave orthopedic damage as the boat keeps floating away, no matter how many mandates it has got.Our sympathy for the Fed chairman, Jerome Powell, keeps us, on our perch on the dock, from calling out advice on what to do. We wouldn’t want to stretch the metaphor too far. Our instinct, though, is to focus on the flaws in the system by which the blasted boat is tied to the dock in the first place. Or whether we need a new setup to keep our captain from getting split down the middle. Maybe there are other ways than simply letting things float.This comes to mind as the value of the dollar, in the classical monetary metal of gold, has collapsed to a record low that is less than a 3,600th of an ounce of gold. Predictions of a dollar of less than a 5,000th of an ounce are being heard. One would think that this might be cause for alarm — or even shame — by the custodians of the greenback, as we call our Federal Reserve notes. Yet they manage the dollar seemingly without a fare-thee-well to gold.We, for one, can’t help thinking that the collapse of the dollar in terms of gold is something of a marker for the grocery prices that are shocking our housewives and others who do the shopping for food. They are going out every day with $50 or $100 and returning with a small plastic bag with barely a meal for two, if that. What are they, in their millions, going to be thinking when they go to the polls in barely more than a year to select a new Congress?That Congress, like the current one, will possess all the monetary powers granted to our government in the Constitution. The power to tax, to borrow on the credit of the United States, to coin money and regulate the value thereof and of foreign coin, and to fix the standard of weights and measures. Is the next Congress, too, going to sit there and do nothing as the fellow with one foot on the dock and the other on the boat tries to keep from going kerploosh?

A Metaphor of the Fed

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