I’ve had a good time reading the bits and pieces of the Williamson, et al, dustup regarding the firing of sadomonetarists from the Minneapolis Fed. In a
his latest September 27 post, Williamson has some rather unkind things to say about Kocherlakota, labeling him as purveyor of 1970’s style inflation by targeting unemployment (and of course that isn’t what he’s doing). The interesting part is the cluelessness sprinkled throughout the post: we just don’t know what QE does… how it works… why it works… But Kocherlakota wants to do it anyway (my paraphrasing). Then, at the end he says it’s a failure. But didn’t he, in this same post say that Kocherlaokta is going to bring on 1970’s style inflation with QE? He can’t have it both ways (nor three or four different ways).
It sounds like weasel verbiage for someone who is opposed to QE on grounds other than technical, hence the absence of any logical argument against it, but really doesn’t want to say that he couldn’t care less about employment. Though, the last I checked, Humphrey-Hawkins is still the law that governs the objectives of the Federal Reserve as it executes Congressional power delegated to it. At least he chose to “play dumb,” which is slightly better than the route chosen by his subversive intellectual cohorts who believe that they have a right to keep the economy weak until Congress does what they want – as if those congress critters are not elected by the people.
I think that as talented of a macroeconomist Williamson is, his best bet would be to make his case logically, lest someone might get the impression of cluelessness – or worse, intellectual dishonesty. It’s very easy to propose tight money as some kind of cure-all. But when those cures fail to materialize while there is a pronounced public uproar regarding the state of the economy, it should be quite obvious that it isn’t working out as planned and people don’t want it.
The Fed isn’t about ivory towers where bureaucrats who like themselves quite a lot impose their whims on “the masses” of white lab rats. “You will live as WE say you will.” Isn’t that really what all of the dishonest propaganda about inflation, bubbles, and whatever other unnamed fear they can trot out has been about? If tight money can’t be sold with honesty or, as it appears, not even with dishonesty, it’s time to give up while not getting caught in the crosshairs.
I don’t necessarily intend to be unfair to Mr. Williamson. He did choose to attack Kocherlakota instead of defending the indefensible. But he’s in that fuzzy gray area enough, and seemingly indifferent to the effects of his policy preferences on others that he’s fair game.
I couldn’t be more thrilled that Kocherlakota had the courage to fire these people because they were doing nothing more than pontificating with math – and they were doing it while playing the violin to the sound of financial suffering the globe over. If I had my way, the people at the Minneapolis Fed would have been just the beginning because nearly the entire Federal Reserve System is corrupt and rotten to the core.