As the labor market tightens, businesses become willing to pay higher wages." Thomas L. Hogan is a senior researcher for the American Institute for Economic Research (AIER), a libertarian think tank headquartered in Great Barrington, Massachusetts. In the following viewpoint, Hogan argues that monetary policy is not an effective tool for addressing inequality. The author notes that the Federal Reserve revised its monetary policy objectives by implementing diversity, equity, and inclusion (DEI) initiatives intended to reduce racial disparities in employment, income, and wealth. Hogan asserts that, prior to 2019, the Federal Reserve pursued a neutral monetary policy to support economic growth. As the Federal Reserve switched to an activist policy of maximum employment, the author contends, inflation began to rise, driving up consumer prices and risking a recession that could exacerbate the racial wealth gap. 

As you read, consider the following questions: 

1. Why do you think the author refers to monetary policy as a blunt tool? Do you agree with this characterization? 

2. What evidence does the author present to support the argument that the Federal Open Market Committee (FOMC) did not respond quickly enough to inflation? Do you find it convincing? 

3. In your opinion, what actions, if any, can institutions such as the Federal Reserve take to address income inequality in the United States? Explain your answer.

Answer rating: 100% (QA)

1 The author likely refers to monetary policy as a blunt tool because it affects the entire economy ... View the full answer