An Article For Me and You and Everyone We Know

August 12th, 2010

As newspapers aim to write at a sixth grade reading level, I sometimes question my college student status and consider pulling a Billy Madison.

However, I patted myself on the back yesterday while reading an accessible New York Times article about the Federal Reserve. The piece features commentary from many opinionated economists, who together create a thorough body of thought on the Fed’s handling of the economic recovery.

“I would never have accumulated the big portfolio of mortgage-backed securities in the first place…To me, the appropriate function of the central bank is to provide generalized liquidity, and not support for particular sectors, which is properly a fiscal policy decision.” – William Poole, former president, Federal Reserve Bank of St. Louis

“On a very simple level, the Fed is printing money so the Treasury can spend more than it’s collecting in tax revenues…it is always a temptation to use the central bank to finance government expenditures.” – Carl Walsh, professor of economics, University of California, Santa Cruz

“I think the Fed has been intellectually behind the curve…Except when the crisis was at its worst, the Fed has been worried about future inflation, when all along, that has been the wrong worry.” – Albert Wojnilower, economist, employee of New York Fed, 1951-1962

Good (until the last drop), the Times may have embraced the whole sixth grade reading level thing a little too hard by the end, “They have been expecting the world to assume the shape that their models predict, a world in which ‘animal spirits’ are overflowing. In the U.S., we have the opposite problem,” said Wojnilower.

Nothing li
ke a ‘spirit animal’ metaphor to bring home the analogy, Mr. Wojnilower. Apparently this economist’s love of goes well beyond his dedication to “Team Jacob.”

So check out the rest of this insightful article here. No need to give it the old college try; your sixth grade education will be just fine.


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