AN OASIS IN A WORLD OF HACKS, HUSTLERS, AND HIRED SPIN
posted by The Cunning Realist at Wednesday, July 29, 2009
Greider writes well and clearly knows his business but, as is typically the case when developing an argument, does not explore plausible alternatives. As an alternative, what if it was assumed the Fed was neither nefarious nor overreaching but primarily reacting as loyal technocrats to inappropriate or inadequate fiscal policies?That leads to some alternative ways of phrasing the question:If the only acceptable path those in power will follow is increasingly deep tax cuts and deregulation even when it is clear this is economically inefficient or dangerous why would it be surprising that a sympathetic monetary authority would cut interest rates in an effort to stimulate growth sufficiently to deflect the worst consequences of those policies?What would a Fed be expected to do if it became clear that its actions only exacerbated those consequences yet the same masters are still in charge and none of them even yet appears to have the insight and political courage sufficient to the task of remedy? Worse yet, when a new set of masters enters, they barely seem prepared to change the course the previous master's set.A central bank seeking to fulfill its mission against the roaring headwinds of political stupidity or timidity might do some things it would not otherwise do, or at least it would seem that hypotheses is not completely implausible; its relative simplicity at least recommends it if nothing else does.
Actually, now that I think about it a bit more, the alternative hypothesis is not only more simple it is also more consistent with facts in evidence -- e.g., a history of political chicanery and venality -- while appropriately discounting facts not in evidence such as nefarious intent on the part of the Fed (not in evidence to those of us lacking appropriate receptors in our molars at least).Occam's Razor is probably too sharp a tool for social science so simplicity and veracity may be insufficient so consider this thought experiment as supplement: What would have happened in the 2008 crisis if the constraints Greider proposes for the Fed were actually in place? Now try visualizing a congress faithfully adhering to its constitutional oversight role the past couple decades (this is a tough one I know); think there would be any need for new rules on the Fed then? Posing the problem as an unfettered Fed in need of more stringent constraints rather than a polluted political atmosphere in which governance was, and to some degree still is, despised, suspect or neglected is an unconvincing framing; creating new rules in a system like that is meaningless, the problem is moral rot.Shorter: Most politicians, after much chest beating, will do their level best to avoid imposing serious rule changes on the Fed because even the dumber ones realize that technocrats give them good cover and the cover the technocrats of the Fed provide is nothing less than priceless: From evading stands that could jeopardize financial support for their next campaign to providing convenient scapegoats when things go wrong (as they eventually must in the absence of rational fiscal policy), you just can't beat it particularly if you've convinced yourself it doesn't really matter anyway.That's the real black hole of our democracy. IMHO
ALOHA !!So far nobody has convinced me we need the US FED and its member banks. Why do we need banks to make loans? Do we not have the technology to do away with banks? What good is Bank America if it is closing 600 branches?On top of that why do we need to pay interest on all loans? If it is truly the wealth of WE THE PEOPLE being "loaned" the who died and made Well Fargo God?
It'll be interesting how they handle this: $100 Million Payday Poses Problem for Pay Czar
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I am a New York City resident in my forties, an investment professional, and a conservative. I have an MBA from Columbia University.