me:
>> It's not that the Fed has "turned left." Instead, its leadership
>> (mostly) knows that if they want to save their main constituency (the
>> banks, Wall Street) in the current situation, they cannot accept
>> right-wing bromides.
raghu wrote:
> I think this is too simplistic. We cannot speak of the Fed as if it
> were one monolithic entity that has a completely, coherent and
> consistent politics.
_Of course_ it's simplistic, since it's a single sentence (aimed at
the interpretation that the Fed is simply the home of right-wing
bromides of the sort that The Maestro used to dish out). Even then,
there was the word "mostly" indicating that I knew it was too simple.
> Specifically, Ben Bernanke and the Fed Board of Governors is a
> technocratic entity that seems eminently clear-headed and sensible
> when compared with, say the ECB. I think it is a mistake to suggest
> that Ben Bernanke serves Wall St in the way that Greenspan did.
> Bernanke is a right-wing Keynesian and has always been one fairly
> consistently.
The reason why the Fed is "eminently clear-headed and sensible"
compared to the ECB is that it has a different charter. The ECB was
created to serve the zero inflation/balanced budget dreams of
Classical economics, following the wishes of the European/German
branch of neoliberalism that seemed so triumphant at the time. The Fed
exists under rules and laws that cause it to give at least lip service
to the idea of attaining full employment. But more importantly, the
long history of the Fed indicates that it acts primarily to _stabilize
the banking system_ (especially when the latter is in crisis). In even
more desperate brevity than my simplistic sentence above, it's a
government-sponsored cartel of banks that's limited by the fact that
the politicians sometimes insist on accountability (sometimes from the
right, as with Ron Paul).
As I've said before, there are two main ways to "serve Wall
Street."[*] The first way is that of Greenspan -- and Bernanke when he
was under Greenspan -- which is to give Wall Street and the banks
exactly what they want (bolstered by happy talk about the Invisible
Hand). The other is to work to serve the _long-term_ and collective
interests of the Wall Street and the banks, which involves promoting
the system's stability. This may go against Wall Street and the banks'
explicit desires. (The Fed is supposed to be the adult in a room full
of Wall Street and banker toddlers.) That's what Bernanke is pushing
nowadays -- partly because the old way was a massive failure, leading
to economic stagnation that weakens the banking system and Wall Street
(all else constant).
I thought that the idea of "technocrats" automatically being a good
thing fell apart due to the Obama administration. Though it's great
that Obama has appointed experts instead of idiots, breaking with
Dubya's practice ("Heck of a job, Brownie!"), technocrats bend with
the political winds whether they want to or not. For example, the
Technocrat-In-Chief (Obama) vetoed the FDA's recommendation that the
morning-after pill be available to all women -- because of political
pressure.
> The NY Fed, on the other hand, is a creature of, by and for Wall St.
> But it too represents the Wall St aristocracy (JP Morgan and Goldman
> Sachs) rather than the Tea party loving hedge fund types like Peter
> Schiff. Their long-term greed may seem positively enlightened in times
> of crisis such as these.
That fits what I said above: there's more than one way to serve Wall Street.
> And finally there are the minor regional Feds, many of which are
> loaded with ideological right-wing types like Kocherlakota.
>
> What you end up with from the Fed as a whole is a variety of
> contradictory voices, some of which seem progressive in comparison
> with the rest of the power system.
here, I'd say "progressive" (an amazingly slippery word) means
promoting the long-term collective goals of the banking and financial
system.
--
Jim Devine / "In science one tries to tell people, in such a way as to
be understood by everyone, something that no one ever knew before. But
in poetry, it's the exact opposite." -- Paul Dirac. Social science is
in the middle.... and usually in a muddle.
[*] I wonder. If we found a Fed-published book titled "To Serve Wall
Street," would it turn out (after being translated) to be a cookbook?
Nah.
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