Yes, the Fed controls how much money is worth, ie the price level. They 'print' more or less money so that the change in the general price level (aka 'inflation') hits their target.
They are sometimes a bit clumsy, yes. But they manage to get long running inflation to 2%.
(Especially they can always create more inflation by just buying more and more stuff with freshly printed money. If that ever fails, that means they have unlocked an 'infinite wealth' cheat: just keep printing and buying until you own the whole world. Obviously, the dollar would lose value before that, hence proving that they can always create inflation.
Lowering inflation isn't always possible, yes. But it's always possible as long as they have any assets on their balance sheet: incrementally sell those assets and 'bury' the money received in the sale.
As long as the Fed ain't out of assets, they can lower inflation.)
> they can always create more inflation by just buying more and more stuff with freshly printed money.
the GFC would like to chat about that.
The feds cannot nudge more than a tiny bit in either direction. Look how much money was printed during and post GFC, to try make inflation higher, and it never did.
The bank of japan tried the same a decade earlier too, in japan. Inflation never took hold no matter what they tried.
> As long as the Fed ain't out of assets
the Feds can never be out of assets, as they just print more. What they cannot control is the hearts and minds of all economic participants - and that is where the root of inflation (or deflation) comes from.
They didn't take their own advice, that they previously gave to the Japanese central bank in the 1990s. Instead, they started paying interest on excess reserves to neuter their own buying.
> Inflation never took hold no matter what they tried.
They tried approximately nothing. As I said, if you found a way to keep printing money without raising inflation, that's actually an opportunity, not a problem: just keep printing money and gradually buy the rest of the world for a bit of paper and ink. (Well in reality, it's only database entries. Which are even cheaper.)
If they can't create inflation, they should go and take lessons from Argentina, Turkey or Zimbabwe.
> the Feds can never be out of assets, as they just print more.
The Fed prints liabilities, not assets. Domestic money is a liability for the Fed. Assets are the stuff they bought with the money, like eg bonds or gold.
