I read Professor John Cochrane’s blog about two Federal Reserve nominees that will go before the Senate Banking Committee soon for confirmation. When I saw the nominations, the first thing I did was go to the nominees’ web pages and look at their research.
I try to keep an open mind, and frankly, it’s hard since it pays so well to be a cynic these days.
I always remember Reagan’s warning that leftists will want to eliminate gun ownership, control your health care, and your money. Once they control all that, you are at their mercy.
There is some bias in finance, but even people from the opposite side of the political spectrum can look at numbers and agree. They might not agree totally on the prescriptive policy to solve the problems the numbers are illustrating, but at least they can agree on the problem.
For example, many economists have been saying we have inflation. The Fed and many left-wing economists said we didn’t. Larry Summers, a saltwater economist that leans left said that we had inflation. He was used as a punching bag by some. Now, of course, the world has finally started to see what he and the other economists saw. We have runaway inflation and it’s not going to get better soon.
Predictably, the left-wing economists went on a personal attack.
I don’t know Professor Cochrane. I watched him on a panel in January 2009 at the University of Chicago slice and dice the Chicago Federal Reserve President over the actions of the Fed during the financial crisis. Cochrane was in favor of letting the banks go bust. He was correct and we’d be better off today if they had. He is most certainly part of the freshwater school of economics.
He is most certainly not a white supremacist or racist. He is direct and his blog was plain-spoken about the qualifications and backgrounds of Biden’s nominees.
For what it is worth, I like people who are direct.
For those of you that don’t know, the Federal Reserve is charged with doing two things:
Keeping the nation employed
Keeping inflation low or manageable.
The Fed uses monetary policy to accomplish those tasks. Often, those two goals are at odds with each other, so there is a natural tension. In many debates, people have pondered dropping one of those mandates. The Fed is human, so it screws up sometimes. The Fed also doesn’t control the Congress which controls the purse strings, so it has to respond to their actions and the actions of the Treasury.
Most people understand Fed policy via the interest rate charged on loans. But, it’s much more complex than that. Daily, the Fed takes open market actions that have downstream effects on economic incentives that affect decision making. The Fed also has to make sure the banking system is secure so payments happen and the wheels of capitalism turn. It’s a big job and one could write a book on it.
Biden nominated two people that are unqualified to work at the Federal Reserve.
Biden consistently nominates people to work in his administration that doesn’t have the merit to be there but fit a narrative.
One of his nominees wants to use monetary policy at the Federal Reserve to work on climate change. The other wants to use monetary policy at the Federal Reserve to combat systemic racism. It’s convenient both are female and one is Black. Criticize them and you are a racist woman-hater.
Let’s debate those two topics openly. Let’s televise it. Let’s have economists like Romer and Cochrane weigh in. Let’s do it in plain-spoken words people can grasp. Milton Friedman was fantastic at relating difficult economic concepts to everyone.
Here is what I think. If climate change projects are net present value positive, or if speculators, ie venture capitalists, and investors, think they will pay off big, capital will get allocated to them. The tax code and government subsidies already prop up “climate change” companies that wouldn’t be in business without those tax breaks and subsidies. Paper money isn’t racist and interest rates aren’t either. Systemic racism is a made-up topic that only seeks to use race to advance a hard-left agenda.
Retiring Senator Pat Toomey’s statements embedded in this tweet are worth a watch
Funny thing is that Dodd-Frank crushed community banking. All Democrats voted enthusiastically for it. What happened is the very banks that could allocate capital in “people of color” neighborhoods were forced out of business due to the weight of government regulation and overreach. The other thing that happened is they were swallowed up by bigger banks.
That made access to capital for a segment of the population virtually impossible.
If we want to build a great quality of life in downtrodden neighborhoods, government solutions are not the answer. The government only screws things up. We have evidence of that going back to at least 1965 if not further. Reagan’s satirical statement, “I am from the government and I am here to help” rings absolutely true.
The path forward is to create banking systems in those neighborhoods that are accessible and will lend money to finance capitalistic for-profit projects in those neighborhoods. It’s a shame I have to italicize “capitalistic for profit”. The woke want non-government non-profits.
Less scrutiny, more patronage.
It does not generally work very well for an entity that controls one specific part of a system to try and control the entire system. If control of an airplane were to be split between two pilots, one controlling the yoke and the other controlling the throttle...and the plane was losing altitude because the throttle was at or near idle...and the yoke guy tried to maintain altitude or climb by pulling back on the yoke...the the outcome would not be good.
The Fed doesn't control regulatory policy or tax policy or intellectual-property policy or dozens of other factors influencing economic prosperity or lack of same, but yet it is often viewed, and views itself, as being responsible for running the economy and maintaining prosperity, including monotonically upward stock market growth.
S Court by any means necessary
https://www.zerohedge.com/political/ex-clerk-biden-scotus-hopeful-edited-wikipedia-pages-make-her-look-better-rivals-worse