Back in another life, as a member of a team of infrastructure technology architecture strategists, at the beginning of every year our top level strategies and guiding principles would be reviewed with business leaders to make sure that corporate IM as a whole was moving in the same direction as the business, and to identify areas where changes might need to be made to ensure IM systems would meet the needs of business in a timely and cost effective way.
The guiding principles were a series of statements, something akin to the golden rules of architecture that applied to everything either already deployed within the infrastructure or technologies that were under consideration, such as “We use technology products that meet the needs of the business and infrastructure coherence standards rather than best of breed.” Other words for this statement could be, “We do technology for the sake of the business in a way that reduces technology management complexity, not for the sake of individual technologies,” or “We don’t spend a ton a money to build and maintain a Ferrari when a Chevy will get us where we want to go with lower maintenance costs.”
The company I worked for was very serious about infrastructure coherence standards too. Any new thing in planning stages had to pass the infrastructure coherence checklist or it was rejected, and subsequently would go through an exception process that accounts for the cost of integration points and maintenance of the integration. That is because integration points are very expensive to manage, and they introduce subtle differences in functionality that need to be accounted for, and upper management would need to sign off on the extra costs before the technology could be used.
An example might be an application that, rather than being able to integrate with and use the Active Directory account database for authentication out of the box, it has its own account database. This might seem like a simple thing, just give people accounts in the app and be done with it. But in a company that has 60,000 employees, that is far from practical in that it’s nearly impossible to manage the security of the application. Helpdesk personnel would need access and be trained, or the app would need its own helpdesk and engineering staff because it doesn’t work with automated account management systems, etc… Compared to a different brand of application that does the same thing that is compatible with LDAP and therefore wouldn’t come with all of the additional administrative costs, you can see which product would be preferred. And this sort of preference is easily predictable; so those involved in product selection at the individual application level can save themselves and everyone else a lot of time by rejecting these before they even get to the coherence testing phase of deployment.
As I’ve been watching the FOMC in action over the last decade, I can’t really tell what set of guiding principles for monetary policy are followed. Scott Sumner says the Fed is too slow, the monetary environment is becoming tighter and tighter as developments in trade happen, and the Fed is still selling assets as if it were 2008.
If I use a general barometer of the VIX, for lack of something better like a NGDP futures market, I can look at it over time and tell that market conditions now are nowhere near the magnitude of 2008. It’s more like 1998 in the onset of the .COM bust. But if I think about the damage the .COM bust did to the economy, the idea that current conditions are not yet of the magnitude of 2008 is hardly a consolation, especially when considering that the monetary framework is now very different than it was back then. It is inherently biased toward tight in that reliance on IoER to provide a faster response to inflationary pressure makes easing difficult both politically and operationally. And in that regard, if the FOMC, as part of its guiding principles had something like a preference for fire prevention over reliance on fire insurance to repair the damage after a fire, then it would need to stop selling assets now and evaluate what response is needed now, if any. But if all the Committee is about is controlling inflation at the expense of all else, or perhaps is really just more of nebulous cloud of whimsical action, then damage is what happens as it carries on as if nothing is different about today compared to last month while little economic fires spring up out of nowhere to exacerbate the tight policy condition.
If the thing that I believe should be at the very top of the FOMC’s pyramid of guiding principles, the one principle to rule them all, the legislated mandate to manage monetary and credit aggregates commensurate with the economy’s long run ability to produce, were operationalized and guiding everything happening with monetary policy in real time, then it would be reasonable to assume that fire prevention is far more important than anything else, and I should expect to see some policy action as the GDPNow Cast continues its decent.
But the sense that the chirps of crickets are the only things that can be heard in the marble halls of the FOMC gathering place is rather overwhelming, and thus it’s not logical to assume that the legislated mandate is at the top of the FOMC’s guiding principles. And if Congress’ priority for monetary policy that has been codified in law is not the Committee’s main priority, then what is and how much does unmitigated damage cost society in general? This damage is not free, nor is it easy on the individuals it impacts, individuals who are so much more than dots on a chart.
The FOMC needs a guiding principle of monetary conduct to rule them all, and it can’t lose if it uses the legislated mandate to dictate which technical choices are doable, and which are not; and which are legal and which are not, because it isn’t okay to be outside the law as long as there is someone or something else to blame. The purpose of monetary policy is purpose Congress expressed by law, and anything else isn’t up to the rule of law standard of democratic society.
PS: My tomato plants appear to have survived the move from growing in soil to growing in my hydroponic growing containers and are doing well.