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O magnum mysterium

By Owen Paine on Sunday February 12, 2006 11:56 AM

The tireless Ralph Nader recently zeroed in on our dear old Fed. He's a bit out of his element but on target none the less.

He notices that gentle Ben, our new Fed chair warmer, loves the word "transparency." To date that has translated in reality to just: "stating explicitly the numerical inflation rate... consistent with the goal of long-term price stability"

As Ralph points out that's common practice... in Europe. But Ralph takes the transparency ball himself and runs as far as he can with it. (Remember, he's a lawyer, not, like me, an attack trained political economist.) So how far does he get?

Well here: Let's "democratize Federal Reserve transparency." He gives some self-described "baby steps" towards that end -- a seven point program:

  1. Regular open press conferences by the Chairman.
  2. Adhere to the Budget Act which requires the submission of a formal annual budget subject to review by OMB and the Congress.
  3. Require congressional appropriations for all Federal Reserve activities.
  4. Allow the early release of Minutes of Federal Open Market Committee meetings .
  5. Hold open meetings on all issues not involving monetary policy.
  6. Require full audits by the Government Accountability Office (GAO)
  7. Support legislation to prohibit commercial bank officials from serving on the boards of the 12 Federal Reserve District Banks.
Kind of a mixed bag.

Point 7 is splendid for obvious fox-in-henhouse reasons. Points one four and five are at best quixotic. Two and six would be great if the Fed was just spending money, not controlling the credit system and triggering recessions when wanted, neither of which costs anymore than falling asleep would. That leaves number three which I'll repeat:

3. Require congressional appropriations for all Federal Reserve activities.
Sounds like nunber two in substance, right? Well, here's my point: If the House wants to get its way policy-wise it could use this whip, eh? Starve 'em out if they didn't respond to the people's will.

Comments (1)


Intresting how low, or even nonexistent, is the level of Left analysis of this stuff outside of the hermetic circle of "radical political economists." For all you see in the usual left press and web sources, there might as well not be a Fed.

Not that I understand the first thing about it myself.

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