Federal Reserve Bank in Washington, DC (cc photo: Dan Smith/Wikimedia)
In its usual bipartisan way, the Washington Post (12/18/15) took even-handed swipes at Republican Rep. Jeb Hensarling and at Bernie Sanders, a senator and candidate for the Democratic presidential nomination, over their criticisms of the Federal Reserve Board.
Never mind that Hensarling’s criticisms were over the Fed’s failure to raise interest rates to prevent hyper-inflation over the last five years, while Sanders’ criticism was over the fact that the Fed’s recent rate hike will slow growth and the rate of job creation. In Washington Post bipartisan land, both are equally damnable offenses.
But what is even more striking is the Post‘s ability to treat the Fed as a neutral party when the evidence is so overwhelming in the opposite direction. The majority of the Fed’s 12 district bank presidents have long been pushing for a rate hike. While there are some doves among this group—most notably Charles Evans, the Chicago bank president, and Narayana Kocherlakota, the departing president of the Minneapolis bank—most of this group have been publicly pushing for higher rate hikes for some time. By contrast, the governors who are appointed through the democratic process have been far more cautious about raising rates.
It should raise serious concerns that the bank presidents, who are appointed through a process dominated by the banking industry, have such a different perspective on the best path forward for monetary policy. With only five of the seven governor slots currently filled, there are as many bank presidents with voting seats on the Fed’s Open Market Committee as governors. In total, the governors are outnumbered at meetings by a ratio of twelve to five.
Any serious discussion of Fed policy would note that the banking industry appears to have a grossly disproportionate say in the country’s monetary policy. Furthermore, it seems determined to use that influence to push the Fed on a path that slows growth and reduces the rate of job creation. The Post somehow missed this story, or at least would prefer that the rest of us not take notice.
Economist Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. A version of this post originally appeared on CEPR’s blog Beat the Press (12/19/15).
Messages can be sent to the Washington Post at letters@washpost.com, or via Twitter @washingtonpost. Please remember that respectful communication is the most effective.
WaPo not only “seems determined to use that influence to push the Fed on a path that slows growth and reduces the rate of job creation.” It seems determined to keep on publishing the last global warming denier still standing, George Will.
The biggest lie this year: The US economy has fully recovered from the 2008 great recession.
Truth: Half of America Is in or Damn Near Close to Living in Poverty. It is the fault of the Congress, both Republicans and Democrats should be filled with guilt — and shame — for failing to deal with our enormous wealth disparities. http://www.alternet.org/economy/half-america-or-damn-near-close-living-poverty
How can the Federal Reserve on 12-16-15, Janet Yellen lie saying our economy has recovered enough to raise the interest rates? The 2009 Federal Reserve billion dollar bailouts of the banks was supposed to help the people, instead Americans lost $10.2 trillion wealth and a Federal Reserve report shows that 90% of American families have gained nothing in terms of income or wealth. In fact Poverty level jobs is expected to account for 70% of job growth in the next 7 years. Since 2009, 95% of over $31 trillion created wealth has gone to the 1%. A 2011 Federal Reserve Audit showed that the Fed gave away $16 Trillion to US banks, and foreign banks and corporations without Congressional approval. It gets worse in 2014 Wall Street – Jamie Diamond hand walked a rider/law into a mandatory transportation legislation that authorized the Federal Reserve to once again bail out Wall Street when they fail in the amount of current derivatives of $303 Trillion.
WHAT CAN BE DONE FOR THE PEOPLE? DEMAND REPARATIONS: Make the Federal Reserve issue credit cards for every person over 18 in the amount of $1,200 creating a tremendous positive effect on the economy and pulling millions out of poverty. This could be done globally stopping the horrendous migration of people because of violence, strife and hunger. http://www.nationofchange.org/even-council-foreign-relations-saying-it-time-rain-money-main-street-1409641381
The Economy: The New Normal Isn’t https://ourfuture.org/20151204/the-economy-the-new-normal-isnt?utm_source=progressive_breakfast&utm_medium=email&utm_campaign=pbreak
The State of the U.S. Labor Market: Pre-December 2015 Jobs Release https://www.americanprogress.org/issues/economy/news/2015/12/03/126571/the-state-of-the-u-s-labor-market-pre-december-2015-jobs-release/
WHAT A PRESIDENT CAN DO: Get rid of the Federal Reserve that serves only Wall Street! Time for Public banking!
Drastic times for the majority of Americans means we need bold, courageous leaders to fight the Billionaires, Wall Street, and Corporations. We need a President to pull an Abe Lincoln to avoid a massive debt to private banks at usurious interest rates by restoring an earlier form of government-issued money, the paper scrip of the American colonists. In the 1860s, these US Notes or Greenbacks constituted 40% of the national currency. Today, 40% of the circulating money supply would be $5 trillion. http://www.counterpunch.org/2015/10/28/how-obama-could-beat-the-debt-ceiling-and-go-out-a-hero/
Reinventing Banking: From Russia to Iceland to Ecuador http://www.truth-out.org/news/item/34056-reinventing-banking-from-russia-to-iceland-to-ecuador
TRUTH BOMB – A fact is spoken in clear, easy to understand terms and without bias. https://www.facebook.com/groups/TruthBomb/
It is not just the Washington Post that overlooks the fact that the Fed as a political arrangement will always be corrupted by special interests. All major mass media are beholden to conventional wisdom arrived at from imbibing political propaganda. The question as to whether to raise or lower the interest rate will always be biased unless the members of the Federal Reserve Board are angels. The obvious solution in this supposed land of the free is to let a free market set the interest rate.