Fed Up With The Fed
There’s a major debate going on in Washington these about the future powers that should be in the hands of the Federal Reserve and its chairman, Ben Bernanke. But when you come down to it, who cares?
The main problem with the Fed in setting economic policy is that it has economists doing the job. And they aren’t looking in the right places in the right way.
Take the GDP. It’s increasing. Economists think that’s good. But such increases mean nothing in comparison to the way any increases are distributed. If the very top gets all the increases — which is pretty much what has happened since 1999 — then Main Street, i.e. real people, couldn’t care less that GDP is increasing. It doesn’t do us any good.
Or employment. Jobs may be coming back soon. A good thing? If your new job pays less with fewer benefits than your old one, then more employment simply means working harder to get poorer. And economists aren’t even looking in that direction.
Or inflation. The indicators in this realm used by Fed policy makers completely ignore the fact we now live in a nickeled and dimed economic culture. Fees, fines, co-pays, giving-less-for-more are the applicable rule in today’s markets and in people’s relationship with their governments, local and federal. That’s where inflation is now taking its biggest bite.
Out here in Real World as opposed to Economist World, we’re dying the death of a thousand cuts. A lot of us have come to regard Fedfolk and economists generally the way we have long regarded theologians. Bright people dabbling in realms beyond our ken and outside our daily interests.
Give the Fed new powers? Take away some of its present powers. Who cares? Who really cares?
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3 Responses to “Fed Up With The Fed”
economists excel at telling us two things: why what just happened happened and what is coming next.
at the end of the day they seem to be right nearly half of the time.
i agree wholeheartedly with everything you wrote but for one caveat: the FOMC bears huge helpings of responsibility for the collapse of the dollar and the economy. if we don't change them, they're going to keep doing what they're doing and that won't do most of us any good whatsoever.
Economics (the parts that I've been exposed to) seems to deal mostly with how the supply and movement of money affects the economy. Money, however, is simply a way to represent wealth; it is not wealth itself. Its purpose is to make wealth more transportable. Trying to describe the economy in terms of money is akin to describing the operation of an engine in terms of its oil. It's no wonder that they tend to overemphasize the importance of banks.
The Fed has always irked me because it is privately owned with government power, giving us the worst of both worlds (opaque government). The fact that congress is considering giving them even broader authority without forcing them to open up is just another example of the fiscal insanity that we've been witnessing these last few decades.
Instead of asking whether they need more or fewer powers, I say break their shell and force them to operate out in the open.
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