Fed Up - a reread on the politics of the Fed

 

Is the Fed political? Yes, to the extent that it is driven by its own self-interest and preservation. It is political in that there is significant inbreeding of thinking and culture. This is especially true of research. All well-trained economists who often think alike and are focused on publishing research on their chosen topics, rather than on driving better decision-making by the Fed. It is not that they do not want good policy. It is the fact that they cannot think of how to do policy that veers from the status quo. One could say that QE and zero-interest rates did not establish the status quo, but they were a solution that fit the macroeconomic narrative at the time. 

I reread the Book Fed Up to hear one insider’s view of the Fed. This is not written by the Chairman or a leading economist but by a Fed bank advisor. It was a little long and could have been more directed in its arguments. Still, anyone who reads this will appreciate that having well over 1,000 economists and multiple regional district banks is crazy and does not serve the country’s good or its policies. 

I am not arguing for lower rates, but I will argue that the Fed could use a good shake-up.