Is the Fed's Role in Our Lives Somehow Better Now?
Here's a claim that the Fed's role in our lives is better. It gives credit to outgoing Fed Chairman Ben Bernanke:
Bernanke has increased openness - compared to Greenspan. Big deal. Greenspan, if you remember, specialized in a form of the English language unique to him that completely obfuscated everything he said, purposely so, in order that no one could really understand what the heck he was talking about. So an improvement on that can't really said to be much of an improvement, can it?
As for the specifics of this openness, let's take them one at a time.
Interest-rate forecasts: If they were reliable, it might benefit someone. They're not particularly accurate, so who cares?
Announcing projections for economic growth, unemployment and inflation: Ditto. The Fed has never been a particularly accurate forecaster of the growth of the economy, unemployment or inflation. We're not talking about reporting on what is, we're talking about forecasting here. When they report on what is, they're data can be valuable. But as for what they think is going to be - which is what forecasting is - if their forecasts aren't especially accurate, who cares if they're more open about letting us know what their forecasts are?
As for the Fed's role being enhanced in the public's mind, how does Mr. Goodfriend know this? He says the Fed has "intervened more expansively in the economy." We all know about the various bail-outs and attempts at QE. Have they resulted in any serious economic growth? If not, then how does the intervention "enhance" the Fed's role? If by "enhanced, he means "intensified" or "increased," then of course it is. If they've intervened more, then their role has increased. But all that says is that the Fed's role has increased because they've increased their role in the economy. In other words, it's really not saying much at all.
As for people becoming "more knowledgeable about the Fed's powers," might I suggest that if people really became knowledgeable about the Fed's powers and how they've used those powers over the last 100 years (the Fed was established a century ago, in 1913), I'm not so sure that people would be too happy with that what they'd learn and I'm not sure the Fed would be so eager to make itself more understandable - if by understandable Mr. Good friend means really telling the truth about the powers of the Fed and how they have used them in the past and continue to use them today.
There's more to the article, but the rest is mostly a bunch of comments and quotes sort of strung together to supposedly address the headline which is - get this:
What does this mean? How is it that the "Fed belongs to everybody"? What's the meaning of the public saying it's "our money"? We're the public, aren't we? Have you ever thought or said that the Fed's money is your money? And what might that be - the money that the Fed holds in its accounts? The money it creates out of nothing? There's absolutely nothing in the article that addresses whatever the point of this headline is supposed to be! (Please excuse my frustration.) It's just a nonsensical headline that leads into a collection of random comments some of which we just took a look at and, I think you will agree, are pretty much meaningless.
So there you have it. A simple application of reason to this Bloomberg article reveals that, once again, Bloomberg manages to present a bunch of gobbledygook posing as financial "reporting." That's why spending too much time with these financial media sources can drag your IQ down by more than a few points. Unless you want to dumb yourself down, don't waste time with this sort of nonsense.
Bernanke’s efforts to increase openness also include revealing policy makers’ interest-rate forecasts and announcing projections for economic growth, unemployment and inflation four times a year, compared with twice under former Chairman Alan Greenspan.The problem here is that none of this really makes much sense. Let's apply our reason here to see why.
“The Fed’s role in the public’s mind has been enhanced” as it has “intervened more expansively in the economy than ever before,” said Marvin Goodfriend, an economics professor at Carnegie Mellon and a former adviser at the Richmond Fed. “As people become knowledgeable about the Fed’s powers, the Fed, in turn, has an interest in making itself more understandable. That’s a dynamic that’s likely to continue.”
Bernanke has increased openness - compared to Greenspan. Big deal. Greenspan, if you remember, specialized in a form of the English language unique to him that completely obfuscated everything he said, purposely so, in order that no one could really understand what the heck he was talking about. So an improvement on that can't really said to be much of an improvement, can it?
As for the specifics of this openness, let's take them one at a time.
Interest-rate forecasts: If they were reliable, it might benefit someone. They're not particularly accurate, so who cares?
Announcing projections for economic growth, unemployment and inflation: Ditto. The Fed has never been a particularly accurate forecaster of the growth of the economy, unemployment or inflation. We're not talking about reporting on what is, we're talking about forecasting here. When they report on what is, they're data can be valuable. But as for what they think is going to be - which is what forecasting is - if their forecasts aren't especially accurate, who cares if they're more open about letting us know what their forecasts are?
As for the Fed's role being enhanced in the public's mind, how does Mr. Goodfriend know this? He says the Fed has "intervened more expansively in the economy." We all know about the various bail-outs and attempts at QE. Have they resulted in any serious economic growth? If not, then how does the intervention "enhance" the Fed's role? If by "enhanced, he means "intensified" or "increased," then of course it is. If they've intervened more, then their role has increased. But all that says is that the Fed's role has increased because they've increased their role in the economy. In other words, it's really not saying much at all.
As for people becoming "more knowledgeable about the Fed's powers," might I suggest that if people really became knowledgeable about the Fed's powers and how they've used those powers over the last 100 years (the Fed was established a century ago, in 1913), I'm not so sure that people would be too happy with that what they'd learn and I'm not sure the Fed would be so eager to make itself more understandable - if by understandable Mr. Good friend means really telling the truth about the powers of the Fed and how they have used them in the past and continue to use them today.
There's more to the article, but the rest is mostly a bunch of comments and quotes sort of strung together to supposedly address the headline which is - get this:
Fed Belongs to Everybody as Public Says It’s Our Money
What does this mean? How is it that the "Fed belongs to everybody"? What's the meaning of the public saying it's "our money"? We're the public, aren't we? Have you ever thought or said that the Fed's money is your money? And what might that be - the money that the Fed holds in its accounts? The money it creates out of nothing? There's absolutely nothing in the article that addresses whatever the point of this headline is supposed to be! (Please excuse my frustration.) It's just a nonsensical headline that leads into a collection of random comments some of which we just took a look at and, I think you will agree, are pretty much meaningless.
So there you have it. A simple application of reason to this Bloomberg article reveals that, once again, Bloomberg manages to present a bunch of gobbledygook posing as financial "reporting." That's why spending too much time with these financial media sources can drag your IQ down by more than a few points. Unless you want to dumb yourself down, don't waste time with this sort of nonsense.
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