Saturday, August 27, 2016

Are we all economists now?

The Fed always inspires debates among informed stakeholders like institutional investors, economists, politicians, seasoned journalists and industry business leaders.

Now the Fed has received a social activist group at its annual Jackson Hole symposium to hear their views on monetary policy.  This week, a movement called “Fed Up” sponsored by The Center for Popular Democracy met with Federal Reserve officials including Bill Dudley, president of the Federal Reserve Bank of New York

The Fed Up team gets an A plus for inventiveness.  These groups usually petition the legislative and executive branches of government that control spending and tax policy, but now one has successfully lobbied the The Federal Reserve within spitting distance.  To be fair, the group did have some trained economists in their midst, but did the activist group belong at this forum?

The Fed’s dual mandate is to influence inflation and employment levels for the benefit of the nation.  Everyone agrees we’ve had an anemic recovery, but the pattern of protests (Occupy Wall Street, Black Lives Matter, etc.) instead of reasoned debate about complex problems, is disturbing.

Yes, economics and politics are inextricably linked, but Fed actions are logically debated on the long view of what’s good for the economy as a whole.  

The Fed's annual meeting shouldn't become a town hall with listening sessions like one conducted by your local Congressman at city hall.  

This group didn't cause disruption at Jackson Hole, but Fed officials' willingness to receive them in the first place, is odd.  If Fed "independence" is genuine, should the most powerful central bank in the world receive all comers?  

Ultra low interest rates and massive bond buying by the Fed have juiced the stock market, but also hammered elderly people living on fixed income investments.  Therefore, should retirees have an advocacy group granted equal time at Jackson Hole, to push for monetary tightening?