In Defense Of Secrecy; Three Prong Attack On The Fed; Selective Myopia
by ilene - January 13th, 2010 1:49 pm
Here’s another terrific article by Mish. If you’ve wondered like I have about the 45B the Fed apparently made last year, towards the end, Mish questions that figure. Op-Toons has a suggestion to improve the accuracy of reported numbers (keep reading). – Ilene
In Defense Of Secrecy; Three Prong Attack On The Fed; Selective Myopia
The Fed is pulling out all stops to defend its secrets, including publishing self-serving mathematical gibberish. Please consider the St. Louis Fed article on the Social Cost of Transparency.
Unless you are an academic wonk, you will be stymied by pages that look like this …
There are 24 pages of such nonsense with titles like
- 2.2 Private Information and Full Commitment
- 2.3 Private Information and Limited Commitment
- 3.2.1 Decision Making in the Day
- 3.2.2 Decision Making at Night
- 3.2.4 A No-News Economy
Just for good measure here is the page describing 3.2.4 A No-News Economy
The article culminates with …
For an asset economy then, the prescription of “full transparency” is not generally warranted.
Approaching the problem under the premise that fuller transparency is always desirable may not be the right place to start.
Hiding Behind Empirical Formulas
The problem is Bernanke places his complete faith in such gibberish, so much so that he has lost all sense of real world action by real people. The result is that in spite of his PhD, he could not see a housing bubble that was obvious to anyone using a single ounce of common sense.
Moreover, had Bernanke simply opened his eyes instead of relying on a poor interpretation of an already fatally flawed Taylor Rule, the credit/housing bubble would not have gotten as big as it did, and we might not be discussing the above ridiculous mathematical formulas that supposedly show us the Fed needs to be secretive.
For more on Bernanke’s love affair with the Taylor Rule (even though Taylor Disputes Bernanke on its usage), please see Taylor, NY Times, Dean Baker Call Out Bernanke.
Appeals Court To Hear Bloomberg’s Freedom of Information Suit
Bloomberg has been in a battle with the Fed for two years over the Fed’s “unprecedented and highly controversial use” of public money. In August it "won" the lawsuit but the Fed has appealed.
Please consider