Passage of the Federal Reserve’s Third Mandate

The American Federal Reserve’s Board of Governors has been negotiating with the Congress in order to add a third mandate to their longstanding missions of reducing unemployment and inflation. Chairman Powell described this mandate as the mitigation of shrinking GDP. We model this mandate by two axioms, which reveal American GDP as the sole driver of global GDP. The close fit of each model demonstrates that axiomatic venture can discover and corroborate truth via distinct pathways. In view of trade-war and pandemic shocks to GDP worldwide, this third mandate is now compelling. Congressional inaction will reduce global livelihood in a post-pandemic era (https://www.federalreserve.gov/newsevents/testimony/powell20190710a.htm).


The Third Mandate and Keynesian GDP
In the great depression Simon Kuznetz formulated American national accounts in terms of dollars, which evaluated different commodities in a common unit.
He added up various national income sources and reported his result to the United States Senate in January, 1934 (Masood, 2016) (Prologue, Chapters 2 and 3). "In 1940, six years after Simon Kuznetz had presented his national income estimates to the Senate, Keynes had written down in a table the basis for what today is the formula for GDP" (Masood, 2016: p. 26). This formula adds up three macro indicators, household expenditure, domestic savings, and government expenditure, which constitute Keynesian GDP (cf. Section 2).
In the preceding decades, John Maynard Keynes had deplored the vindictive Versailles Treaty ending World War I, saved the United States in the depth of the Great Depression, and constructed our gross domestic product (GDP). Following Kuznetz, Keynes introduced household expenditure and domestic savings as elements of GDP in 1936 in his General Theory of Employment, Interest and Money (Keynes, 1936). In 1940 he added government expenditure as GDP's final component in How to Pay for the War (Keynes, 1940).
Near the end of World War II in 1944, Keynes proposed "a new world currency, a system of fixed exchange rates between this world currency and the national currencies, and a world central bank that would run the whole system" (Varoufakis, 2016: p. 14 (Masood, 2016: p. 32). American planners then used Keynes GDP formula to measure the effect of American aid and to manage European economies.
In 1999, mindful of Simon Kuznets original accounting of distinct goods like

Indicators of GDP
This paper views Keynes' three classic GDP constituents as separate time-varying indicators, which are described by the World Bank (http://beta.data.worldbank.org): Household final consumption expenditure (current US$): "Household final consumption expenditure (formerly private consumption) is the market value of all goods and services, including durable products (such as cars, washing machines, and home computers), purchased by households. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings. It also includes payments and fees to governments to obtain permits and licenses. This ratio scaling also allows daily exchange-rates to multiply one nation's currency into another's (e.g. dollars into yen).

Global GDP as an Iso-Elasticity Function of American and Chinese GDPs
Under the definition above, we remodel global, American, and Chinese GDPs with Iso-Elasticity Axiom 2:    Table 2 shows that the American and Chinese slopes in this trilinear log-log regression are β = 1.1462 and γ = .0074, indicating that a 1% reduction in American GDP produces a 1.1462% drop in global GDP (Johnston, 1984: pp. 518-521).

Again, no percentage drop in global GDP is produced by a 1% shrinkage in
Chinese GDP. Empirical support of axiom 2 is provided by R 2 = .9522 for this trilinear log-log regression, demonstrating that global GDP elasticity is driven by American GDP elasticity alone.

Conclusion
Data Science for the Third Mandate: Sections 3 and 4 override "The central dogma of statistical inference, that there is a component of randomness in data" (Van Dyke et al., 2015: p. 9). "Neither denying nor quantifying uncertainty, we simply ignore it." (Bechtel, 2017: p. 8). Our axiomatic approach to sequential populations brings compelling advantages to social data science. We replace probabilistic inference by parameter computation and random variables give way to real variables G, A, C, and P. This suggests further "statistical thinking and new foundational frameworks" that help sort out "the many philosophical issues data science presents" (Davidian, 2013). These "philosophical issues" in data science were broached in the last century by Tukey's Exploratory Data Analysis (Tukey, 1977) and Mosteller and Tukey's Data Analysis and Regression: A Second Course in Statistics (Mosteller & Tukey, 1977).
Exploration and Regression in Data Analysis: In the present paper we make an axiomatic approach to data analysis. Section 3, using a definition, axiom, and result, shows that an axiomatic venture, followed by a close model fit, can discover a particular "truth". Section 4, using an axiom, corollary, and result, illustrates that the discovery and close fit of a particular model does not imply its uniqueness. Thus, we find that an isoelasticity model, with a fit equally as close as its linear counterpart in Section 3, produces an alternative "truth".
The Federal Reserve and Monetary Stability: In the 21st century GDP remains the most sought-after index for measuring global and national economies (Masood, 2016: p. 101 hance the livelihood of all nations in our post-pandemic era. Outlook for 2020: In his Report to the Congress on 31 March, 2020 Fed Chairman Powell noted the "shocking" first quarter drop in Chinese GDP of 36%. The drop in European GDP was 12%, and the shrinkage in non-American GDP in the first quarter of 2020 was 13% (https://www.federalreserve.gov/newsevents/testimony/powell20190710a.htm/).
Six weeks later Powell reiterated the Federal Reserve's unprecedented lending to foreign individuals, corporations, and governments to mitigate global GDP loss (https://www.cnbc.com/world/?region=world, 13 May, 2020). In normal times foreign investors purchase US Treasury assets to boost their GDP. Chairman Powell could only hope that the pandemic will abate soon enough for the US debt to GDP ratio to move from the current 110% to 100%. This would allow low pre-pandemic unemployment and inflation rates to return. Lowering unemployment and inflation are the Federal Reserve's original mandates assigned by the US Congress.
The Powell 13 May, 2020 report was watched by IMF's Chief Economist Gita Gopinath, who warned America of a drop in global economic outlook in 2020 (CNBC, 24 June, 2020). On this same day she predicted that worldwide GDP will shrink 4.9% in 2020 (Aljazeera, 24 June, 2020). In the second quarter US and German GDP then fell 10%, the largest quarterly drop for these two nations since WWII. At an annualized rate, the American Economy contracted by one third of its value (CNBC and Aljazeera, 30 July, 2020).
Recent Oxfam data has verified that rich-nation inaction costs, stemming from poor-nation famines, low education, and civil wars, are orders of magnitude greater than proactive prevention of these tragedies (Aljazeera, 16 July, 2020). Our results in Section 3 and 4 also demonstrate that sinking US GDP endangers global prospects as well as American livelihoods.