TANGA: AFTER THE DECISION OF THE FED IS TIME TO CHANGE COURSE

2 Settembre 2020 Pubblicato da Marco Tosatti

Marco Tosatti

Dear Readers of Stilum Curiae, Dr. Paolo Tanga, former Principal Director of the Bank of Italy, has sent us this reflection on the most recent decision of the FED in terms of monetary policy, abandoning the rigidity of the last few years. Happy reading.

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The news that the FED has modified its monetary policy goals after the interventions in favor of the market to restore conditions of harmonic growth allows me to explain what, up until a few days ago, would have been widely criticized and would have exposed itself to the solons of economic dissatisfaction realized with the introduction of a debit currency without corrective measures.

For those who may have missed the news, the FED stated that the price stability target of 2% should not be an annual dogma, but an average value over time; thus, having found that prices are remaining heavily below 2%, the appropriate monetary policy is that which seeks to recover by aiming for inflation moderately above the maximum objective value of 2%. This corrective disavows the validity of the austerity policy still maintained within the European forum.

At this point I ask the “great” economists and those who have echoed them, criticizing my utterances in favor of the monetary policy being advanced together with our lira – the national currency that had helped bring Italy to fourth place in the world economy – to make a well-publicized “mea culpa” and change course away from the absurd monetary policies followed for almost twenty years, but above all for the last fourteen years.

The return to the past is a must – for those who cannot change, it has by now been demonstrated that they must leave the role assigned to them and recovered.

We have undergone a nefarious policy choice that has induced many of our countrymen to suicide, or better yet instigated them to this grave action because they are convinced of being unable to conduct their own businesses and of the impossibility of paying their debts, while in reality the fault was and still is to be found in the change of paradigm from a real economy of well-being and development to a globalist financial-speculative economy that impoverishes and makes people lose hope: even young people have been hit because despite their studies and preparation they have to be content with menial jobs – if they can find them in their homeland – while the most audacious are forced to transfer abroad to do other sorts of menial jobs. Someone might object that perhaps it would be better if they remained in their homeland: the substantial difference is that when the “uprooted” go abroad they can still count on some form of meritocracy and develop professionally by having the opportunity to hold more elevated positions little by little that demonstrate their abilities; instead, in Italy if someone accepts a menial job he has to remain in that role for life because the “quickness of the intellect” and cultural preparation so praised and sought after by companies becomes instead a punishment that “clips the wings.” This is demonstrated by the criticisms, also coming from the keyboard (of social media) that are made by incompetent people or who undeservedly gain better roles.

After twenty years of damage from the European Union and the euro, as we know them and suffer them, there are still those who blindly show themselves in favor of them without revealing their reasons or offering any tangible proof of the goodness of their beliefs, instead acting like the three monkeys or recalling false clichés, without acknowledging that it is necessary to intervene heavily against the choices made up until now that have led us to and keep us in the miserable condition in which we navigate simply by sight (and even that is when we are lucky, since we are forced to keep our heads underwater in order to end the drowning) which is counterbalanced by the aforementioned recent provision adopted by the FED and its head, Jerome Powell, who, serving precisely to demonstrate the wrongness of European choices and who, however, appears uncertain, lukewarm, and incomplete since he is not addressing the true problems at the root, since he is leaving intact the framework in which monetary policy is inserted exclusively to give more space to expansion by means of keeping taxes low for long periods of time. Unless we can read something more in Powell’s words when he said he is ready to use all the tools available, not only taxes, in order to support the economy, which we would like to see implemented soon.

Translated by Giuseppe Pellegrino