Fed News FridaySeptember 17th, 2010
With long-dated treasuries falling and manufacturing in some areas arriving flat on its face all hope is being invested into the Federal Reserve. Their recent actions in the marketplace have been carefully monitored and some have attempted to predict the outcome of their quantitative easing or tightening up of the money supply options. Although, some may argue that it’s been the Fed’s actions over the past 95 years that have caused this wreckage…more recently has scrutiny been seen. However, leading up to this period you will find very few economists who outwardly express criticism toward the Fed. Why?
According to some research by the Huffington Post, you will find that the economics profession is saturated by Fed employees and Fed policy advocates. This leaves little room for other schools of thought to enter into the “round table” and bring up different perspectives on how to solve the economy’s woes.
Should we blame the economists of the world for not predicting or finding a better solution for the economy? If I do recall there were who accurately predicted the downfall of 2008, yet are not part of the Fed’s policy researchers/advisors. What do they look for in the perfect economist? How can one meet the standards of the all mighty Fed? Is there a certain something that must be on the resume…from what I have read here, there is.
For example, the Journal of Monetary Economics serves as a platform to up and coming economists. By being published here you are receiving some sort of accolade of accomplishment. Basically, you will have entered into the top of the economics profession once published. An interesting tid bit about this publication: Almost all of the board members are on the Fed payroll or have been in the past. That means the highly regarded analyses and research found here is influenced highly by the Federal Reserve. Mind you, higher education institutions favor academic journals for classroom curriculum and businesses use them for forecasting and advice.
When calculated in 1993, 730 economists were working for or contracted by the Fed, and over a 3 year period to 1994, 209 professors were awarded with $3 million for contracts from the Fed. It’s no wonder how the economics profession became so overly pro-Fed, well at least they aren’t advocating against it. They couldn’t afford to rally in another direction if they liked their position and pay.
To relate this to something similar the pharmaceutical industry has long since influenced medical journals in order to promote certain cures and medicines. However, the difference between their clout in academia and the economics world is there are MANY different pharma companies and only one Fed swaying the author’s writing.
When accepting advice from the economists on the mainstream media sources, be sure to check their background and where their heart is on the issue. If it’s in their pay check cut from Bernanke, perhaps you should look for an opinion that juxtaposes theirs in order to form your own.
To learn more about a possible alternative to the mainly Keynesian economic policy of the Fed and main stream economists, check out this work by Murray Rothbard.