Marcus Nunes’ recent post points out some comments made by Tim Duy regarding political considerations for the Federal Reserve given that some top economists are now shedding light on Bernanke’s failed Chairmanship. There is some concern that whatever might be done to the Fed as a result of Republicans regaining control of government would not be an improvement over the status quo, and that they would lock in the explicit inflation-targeting nonsense by stripping out the full employment mandate.
Even if that were to occur, which I don’t think it will as I will explain, it wouldn’t matter because we haven’t had price stability; that is the very reason we are in the mess we are. Aside from this basic idea, and considering the status quo in totality, it doesn’t strike me as appropriate that the Fed should have discretion to create the kind of havoc on the economy and the lives of everyone who transacts in dollars in such a way as it has over the last several years. There is simply no excuse for the way monetary policy has been conducted since at least 2007; while the political system as constituted from 2009 onward has not been able to identify the root cause of economic distress and obviously hasn’t been able to cope with it either. There is no indication that anyone currently with the power to change the situation has a clue, and the focus on what Republicans might do with the Fed while neglecting cluelessness on the part of Democrats seems a bit misleading as there is no indication that anything has changed or will change if the coming elections don’t change the primary players.
Also hidden in the unspoken is an assumption of the political atmosphere remaining the same should the elections change the players, which I think is a mistake. I don’t agree that the same “my way or the highway” kind of politics that has been prevalent since 2007 will endure. What we have seen over the course of the last few years is politics based on ideology, not rationality. We’ve seen government throw money at problems instead of solving them. We’ve seen major changes in legislation written in secret being passed without hearings, public comment, debate, amendments or even being read. That isn’t the environment that was present when Republicans ran Congress or when it was more balanced. I don’t see any indication that should Republicans regain control of government that will continue with a spin to the right. Government will, in no doubt be spun to the right, but I don’t believe it will be the same kind of ideological candy store where government is used to achieve personal dreams entirely at the expense of common sense.
What I see on the part of Democrats, however, is more of the same. An example of the contrast is the process in which both parties developed their platforms. Republicans solicited input from the grassroots; even I, every day average Jane, received an invitation. Democrats, on the other hand, had Union bosses, lobbyists, and presidents of 501(c)’s of their choosing only on their platform drafting committee. Do these people represent a broad range of ideas? I hardly think it so. It really is no wonder they are out of touch. All they care about is the political gravy train while various departments of government destroy everyone else, not excepting the Fed.
Some might have noticed that I placed a link to the Romney/Ryan campaign website on my page, and might be a bit surprised as I have been highly critical of Romney and Republicans in general. I’ve also noticed that some of the more vocal people on both sides of the political divide are partisan to the point of derangement, which is not what I intend. I have simply made a choice that I view to be the most appropriate one, considering the feeling that our world has fallen apart and that government based on legalized tax money laundering and funneling into campaigns is no solution. It does not mean that I endorse, wholeheartedly or without reservation, the entire platform to the last letter, but rather I don’t want to hear from Union bosses, lobbyists, and far left 501(c)’s only as the basis of government. With that condition, we have no chance at rationality, either in this lifetime or the next, and no hope of having a public debate about what should ultimately end up happening with the Federal Reserve.
When the time comes to discuss what should be done with the Fed, as I certainly think something should be done with it, I look forward to seeing a broad range of input and efforts toward consensus building, especially from Market Monetarists, rather than having a particular view point crammed down our throats because it’s the only one that is heard. The Woodford paper strengthens our hand to that effect, not weakens it.