Joe Simonson of the Washington Free Beacon writes today about diversity, equity, and inclusion (DEI) trainings at the Federal Reserve. According to documents, “the Fed held at least four DEI training sessions in the spring and summer of 2021.” That was when inflation was on its way up in a significant way for the first time in roughly four decades.
The trainings are similar to those used by public and private employers, running the gamut of gender identity, “inclusive” language, and “white privilege.” These far-left trainings are at best a giant waste of time, as research has found they don’t achieve their stated goals. They’re also a racket for the consultants that firms and agencies hire to run them.
The Fed doesn’t even believe the stuff it hired these consultants to teach its employees. Simonson writes:
Staffers were also told to refer to Federal Reserve chairman Jerome Powell as “chair,” an example of “gender-inclusive language.” The Federal Reserve’s website refers to Jerome Powell as “chairman of the Board of Governors of the Federal Reserve System.”
Everyone knows the word “chairman” doesn’t hurt anyone, especially when there’s a perfectly acceptable and accurate word, “chairwoman,” for when there is a woman leading the Fed.
If it was only pointless indoctrination, that would be bad enough. But as Thomas Hogan wrote for Capital Matters in October 2022, DEI considerations may have played a role in delaying the interest-rate hikes necessary to halt inflation. As Hogan noted:
Despite widespread agreement that monetary policy cannot fix inequality, Fed officials decided to try it anyway. In August 2020, the Federal Open Market Committee (FOMC) redefined its monetary-policy objectives to be a “broad-based and inclusive” measure of employment. Powell argued this would create particular benefits to “low- and moderate-income communities.”
That was right after the Covid recession, when inflation was still low and the “racial reckoning” was in full swing. Here’s what happened when inflation started to rise, from Hogan:
In February 2021, Powell promised to continue the Fed’s expansionary policy of open-market purchases and near-zero interest rates until a “broad and inclusive” maximum employment was reached. He also promised, however, that “if excessive inflationary pressures were to build . . . we would not hesitate to act.” Inflationary pressures did build, but the FOMC did not act to contain them. Instead, it maintained low interest rates and continued its open-market purchases in pursuit of its new, inclusive, maximum-employment goal.
The FOMC stuck to this overly expansionary policy even after it became clear that inflation was higher and more persistent than the FOMC had originally predicted. Through 2021, Powell repeatedly stated that the FOMC would keep interest rates low until the economy achieved maximum employment and until inflation was expected to exceed the FOMC’s long-run target of 2 percent “for some time.” Despite repeated upward revisions in its inflation projections, the FOMC continued its open-market purchases and kept its interest-rate targets in the range of 0 to 0.25 percent for the entire year.
“By deviating from its traditional mandates, the FOMC helped create inflation that has driven up the costs of living for average Americans by far more than they have seen for decades,” Hogan concludes. Reducing inequality should never have been on the Fed’s radar. It isn’t well equipped to do so, regardless of whether one believes that to be a desirable goal. But DEI considerations were squeezed into monetary policy anyway.