Gogerty: 'Reboot the Fed'
The author of this opinion piece is hedge fund manager Nick Gogerty.
The lack of oversight of an institution which is public/privately so important as the FED is woefully disappointing. Central Banks have been shown to be only slightly more effective at fighting inflation when separated from political controls which are often hijacked to goose short term economic performance to buy elections, independence is a good thing. No oversight is another.
However Central Bankers gone wild with limited to no oversight is on the extreme end of the pendulum, our Central bank has truly jumped the shark.
The US fed is unique as a central bank in that it has 2 policy aims, namely full employment and the control of inflation instead of solely controlling inflation. Here is a little article on such things. (warning it costs $6)
While I applaud the FED for stepping up to the liquidity crisis, a problem which it was certainly a part of creating via the ignoring of massive securitization and the amazing growth of off balance sheet banking, its current stance and lack of acknowledging blame for oversights, conflicts of interest etc, make it a loathsome institution.
In my opinion, the secrecy, lack of accountability and other issues seriously impacts its ability to function effectively going forward. This will probably only come to light when debt investors globally run out of other places to hide or realize the emperor is highly susceptible to drafts or perhaps overdrafts.
Why anyone would purchase US Treasury debt with a maturity stretching out more than 3 months is beyond me. I'll take Norwegian Krone instead.
The US has a lot of brand equity, but it looks like all hat and no cattle to me on the long end of the curve and probably for 3-10 years out. I don't think the Dollar is going to become the Pengo, but it certainly has a whiff of Charmin about it.
I say reboot the FED: Ctrl Alt Del and reposition the whole thing. Yes, I know it will cause a temporary crisis of confidence, but it is time to clean house.
I am not a fan of any organization or political agency which uses Fear as a pretext for its growth of power or ability to be unanswerable. If we started the FED during a crisis in 1913, we can certainly Reset it during one.
Bureaucracies are like babies diapers, they need to be changed from time to time and for the same reason.
Here are some FED facts and a video from the FED explaining its role for those wanting to know more.
I am currently reading Niall Ferguson's The Cash Nexus, Money and Power in the Modern World 1700-2000 and highly recommend it.
Being able to gaze over Centuries of money, politics, war and economy can truly liberate one from the intellectual confines of our inward looking high frequency economy. Some of the most profound things happen at very low frequencies.