Federal Reserve Catch of the Day: Obama's Damaging Neglect of the Fed …The Catch goes to Matt Yglesias, who writes today about "the biggest mistake of Obama's presidency: the systematic neglect of the Federal Reserve and of his ability to influence its course of action." Yglesias notes that two Fed seats remain vacant and without nominees. He gives the sorry history of disregard during the Obama administration and the probable consequences. – Bloomberg
Dominant Social Theme: The Fed is our most important institution and to neglect it is sacrilege.
Free-Market Analysis: The mainstream media is filled with noise about the Federal Reserve's announcement/non-announcement of yesterday. Basically, a middle-aged woman announced that a group of men and women would not raise or lower the price of money that they controlled – but maybe someday they would.
The utter banality of this scene is lost on most because like a rock and roll song it is repeated until we are no longer sensitive to its content. But the idea that a tiny group of people can make such vast decisions with any certainty is simple lunacy.
This is the reality of an elite dominant social theme. The dialectic is critically controlled. The result is something so simple and so obvious that no one will have any trouble grasping it:
"Yes," people say, "they are speaking about whether money is going to be more or less expensive. Yes!"
This is the beauty of such a meme. It reduces the complex to the simple – so that everyone can grasp what is being presented. The meme has been vastly simplified, even as it bears no relationship to the REALITY of money, which is that it cannot be controlled or managed without the kinds of severe consequences we face now.
And thus, there is this Bloomberg "catch of the day," which lauds an article by Matthew Yglesias for pointing out that US President Barack Obama has not attempted to influence the Fed as he should have.
Here's more from the "catch of the day":
Fed Board member Jeremy Stein announced at the beginning of April that he would leave, so that means President Barack Obama has sat on that one for five months (and it's possible that Stein gave the administration advance notice).
And Sarah Bloom Raskin's seat has been open since she was confirmed for her Treasury job in mid-March, but she was nominated for that position on July 31, 2013. That's more than 13 months of neglect, and it's simply inexcusable … So: Great catch!
Of course, we're not so easily impressed. Since we don't think the centralization of monopoly fiat money can ever end in anything but a disaster, we're just as happy that Barack Obama has not attempted to leverage his position or power when it comes to the Fed. He'd probably only make things worse.
We had a suspicion that Yglesias was upset with Obama's lack of proactive management because he believed the Fed was not being aggressive enough about creating more money.
In other words, Yellen's easy money instincts were not receiving enough support from the Obama administration. When we looked up the actual article we found we were correct, as follows …
Obama's biggest economic policy mistake … Barack Obama has not accomplished nearly as much as his most fervent supporters — or, indeed, the president himself — had hoped he would during the 2008 campaign. This has led, naturally, to a litany of back-biting complaints about the corruption or incompetence of the president and his team, a storied list of alleged tactical failings or ideological betrayals.
… Earlier in the year, proponents of more monetary stimulus had reason to hope that we might get something different from new Federal Reserve Chair Janet Yellen. During her previous service on the Fed, she had amassed a reputation as one of the governors most concerned with weakness in the labor market and most eager to push for more aggressive stimulus.
Her elevation to the top job should have increased her clout and increased the odds of more easing. Instead, as Jon Hilsenrath — far and away the best-sourced reporter on the Fed beat — explained earlier this week, with the new job came a shift in Yellen's role. The Chair does not actually have much in the way of formal powers that elevate her above the other members of the Open Market Commission. So as Chair, Yellen "has taken a much different approach, becoming a restrained consensus seeker modeled after her predecessor" rather than her previous role as an "unabashed advocate of easy money who pressed colleagues to embrace her view."
What a simple meme this is! Obama is not supporting the printing of enough money. He needs to do more to support Yellen who instinctively wants to print more. Print more, print more …
Bloomberg finds this analysis so penetrating that it lauds it in an article entitled "catch of the day." One writer wants more price fixing – for that's what central banking is – while another writer is deeply impressed with his economic illiteracy and the passion with which he displays it.
The Fed's pronouncements are like childish antics. Yet mainstream pundits will write a steady stream of analysis about the minimal choices that can be made.
In the case of THIS Fed at this time, the choices are even more minimal than usual. The price of money is not going to rise very fast or very far no matter what.
What we call the Wall Street Party is doubtless going to remain in force, one way or another – if the establishment has its way. In fact, by not printing quite so aggressively, the Fed will ensure the stock market's asset bubble will inflate a bit more slowly and thus the party may last just a bit longer.
In any event, if we can fully grasp the simplicity of this conversation, we can view it for the child's play it is. There is in fact no such thing as monetary policy. One way or another the market itself and the Invisible Hand decide on the price and volume of money.
But the pomp and pageantry of what has been erected like a gilded scaffold around the monetary process is truly a sight to behold. It has been put in place purposefully to impress people, much as the weighty façade of a bank is supposed to present a message of solvency and gravitas.
There is nothing really that can be done at this point for the larger monetary environment in either the US or Europe. One way or another the Invisible Hand will have its turn at rationalizing the money system. These simplistic fairy tales will eventually fragment apart like the asset bubbles that they are supposed to justify.
Profit as you can. Protect yourself as you must. Enjoy the show, if you can bear it.
You don’t have to play by the rules of the corrupt politicians, manipulative media, and brainwashed peers.
When you subscribe to The Daily Bell, you also get a free guide:
How to Craft a Two Year Plan to Reclaim 3 Specific Freedoms.
This guide will show you exactly how to plan your next two years to build the free life of your dreams. It’s not as hard as you think…
Identify. Plan. Execute.Yes, deliver THE DAILY BELL to my inbox!