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Tags: tomas philipson | fed | reforms | economy

Tomas Philipson to Newsmax: Fed Reforms Not Necessarily Needed

By    |   Saturday, 06 May 2023 12:41 PM EDT

The government "is by far the largest risk in our economy," including the Federal Reserve, but that doesn't necessarily mean reforms are needed to the Fed and its operations, Tomas Philipson, the former chair of the White House Council of Economic Advisors and an economist at the University of Chicago, said on Newsmax Saturday. 

"I don't know if it needs reform but it's almost like a too difficult task" for the Fed to enact policies to control the economy, Philipson said on Newsmax's "America Right Now."

"No one can steer the economy, and thinking that within the government agencies that we can fine-tune the economy with economic policy, a lot of economists are very, very skeptical."

Interest rates can be tweaked, and that will mean the economy will head in a certain direction, Philipson said. 

"But the Fed, again and again, it's kind of lagging the movements of the economy," he said. "The economy moves much quicker than the government moves, so many times policies that are intended to do something [do the] exact opposite.

"And now, the Fed has raised rates again to try to slow the economy, even though the economy was clearly slowing before they started to do so," said Philipson. 

Meanwhile, critics say the Fed, which was intended to be an independent entity, is politically compromised, and Philipson said it has "obviously slipped with the climate change agenda" it has. 

But he said he does think the Fed is 'tidying that up now, giving the crisis that we're in…but it is an issue that federal agencies in general obviously take a life on their own away from the electorate and Congress."

Also on Saturday, Philipson rejected concerns that the U.S. dollar is in danger of being replaced as the global currency standard.

"We're about 60% of the reserve currency," he said. The Euro is about 20% and the Chinese currency is about 3%," said Philipson. "People worry too much about China, I think at this point."

The U.S. dollar remains strong relative to other currencies, as it is in demand for the purchase of U.S. assets such as treasuries or stocks and bonds, he added.

"The reason we saw such a strong dollar in 2022 with about 8% gain was because rates were coming up here through the Fed, but also the relative economic performance in the U.S. was higher," Philipson said. "Now we see the opposite in Q1 of 2023. The dollar's loosening because rates are now not expected to go up as much. Also while staring into a sort of a recession, which means the demand for dollars, which is ultimately the demand to buy U.S. assets is being weakened."

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Sandy Fitzgerald

Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics. 

© 2024 Newsmax. All rights reserved.


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The government "is by far the largest risk in our economy," including the Federal Reserve, but that doesn't necessarily mean reforms are needed to the Fed and its operations, Tomas Philipson, the former chair of the White House Council of Economic Advisors and an economist...
tomas philipson, fed, reforms, economy
491
2023-41-06
Saturday, 06 May 2023 12:41 PM
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