The Economy and the Fed
In his Aug. 16 op-ed, "Folly and the Fed," on the subprime mortgage meltdown, George F. Will wrote: "To get a mortgage is usually to commit capitalism; it is to make an investment in the hope of gain." Interestingly enough, when I began writing advertising for homebuilders in 1980, I used the words "good investment," in one my first pieces of copy.
My boss chastised me, saying that to call a home an investment was forbidden, because that meant I was "promising appreciation," which the Federal Trade Commission did not allow.
In those days, as had been the case for decades, the compelling reasons for buying a house with a fixed-rate mortgage were (1) to be assured that your monthly cost to keep a roof over your head would remain stable for 30 years and (2) to eventually own that house free and clear, thereby having no monthly payment in your old age.
I know that would all have sounded terribly quaint six months ago. Not so today.
George F. Will claimed that the "Federal Reserve's proper mission is not to produce a particular rate of economic growth or unemployment" but instead "to contain inflation."
Mr. Will's version of propriety must then include shirking federal law, or at least the legal obligations spelled out in the Federal Reserve Act of 1913, as amended in 1977: the Fed's objectives are "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates."