So far the Fed seems neutral

Sorry, the Fed Isn’t That Powerful

The grand irony is that this stretch of severe disinflation occurred as the Fed pursued a policy, known as quantitative easing (QE), whose stated goal was to boost prices. By purchasing long-term bonds, the Fed reduced long-term interest rates, which it believed would spur demand for credit and get more money moving through the economy—a recipe for faster inflation. As Nobel laureate Milton Friedman summed up, inflation is too much money chasing too few goods. Basically, the Fed thought QE would enable more money to do more chasing.

But it actually did the opposite, because it flattened the yield curve—the spread between long-term and short-term interest rates shrank. This wasn’t good news, because banks pay short-term interest rates for funding, charge long-term interest rates for lending, and profit off the spread between the two. When the spread is big, potential profits are big, and banks have ample incentive to lend broadly. With more potential reward, they can take more risk and lend to a much wider swath of borrowers. When the spread is slim, banks have much less reward to take risk and generally lend to only the most creditworthy. So even as demand for loans rises, supply diminishes, and lending grows more slowly. Loan growth was overall sluggish throughout QE’s lifespan—and negative for a long stretch of it—weighing on money supply growth and inflation.

The Fed basically follows the one year Treasury, then if needed will apply the Fed tax.  The net result is neutrality with respect to government. But the poor get poorer by being locked out of retail banking. 

The Fed was not neutral during the overnight Nixon shock.  Those are called MMT bankruptcies, and we will have one again.