Monday, September 28, 2009


The Most Ridiculous Argument Against Auditing the Fed Yet...

...comes from Barry Ritholz, as relayed by Bruce Bartlett:
While I have been critical of the Federal Reserve (especially the Greenspan years), my beef with them has been their judgment and decision-making process. Congress, on the other hand, is a whole different matter. It[']s not their judgment, but rather, the fact they are owned not by the American people, but by lobbyists, and corporate interests. They have become structurally deformed.

How weird is it for me, who spent so many pages blaming the Fed for a lot of the recent crisis, to find myself in a position of defending them from outside political pressure? The choice we face is the recent Fed regime of secrecy, nonfeasance, irresponsibility, and easy money — versus something possibly likely to be a whole lot worse.

To be found in “contempt of Congress” would require an improvement in opinion of them.

If the Fed has been a major source of problems, Congress is much worse. They were the great enablers of the crisis, readily corruptible, bought and paid for by the banking industry. I find Congress to be the worse of two evils — lacking in objectivity, incapable of producing legitimate regulatory review.
So to summarize: The Fed has handed literally hundreds of billions of dollars created "out of thin air" to politically connected financial institutions. Congress asked Bernanke to tell them which institutions got how much money. Bernanke refused to say.

So Ron Paul and friends are pushing a bill that would force the Fed to disclose the recipients of such handouts of freshly printed dollars. And Ritholz says, "No, that's dangerous, because Congress is owned by the banking industry."

The Fed is a government-enforced cartel of private banks. It is literally owned by the banking industry. In contrast, Congress is merely rented by the banking industry.

So does he propose an "End the Congress" bill? That'd be great, too.
it is funny, ritholtz is a 'regulations' he trusts the fed and the congress to come up with the right regulations but cant handle an audit.err.what gives?

it is the confusion of obamamanics
In 36.5 years, I have yet to discover a critic of the Austrian school who actually bothered to understand the Austrian School.

Refering to DeLong, Roger Garrison wrote:

"Part II of the answer to “Why don’t the mainstreamers see the Austrian theory’s relevance?” actually deals with a follow-on question. “Why don’t they at least make the effort to learn what the Austrian theory is?” After all, economists who study and teach at top-tier universities are intelligent people who could learn the Austrian theory. A little reflection suggests that while they surely have the ability, they lack the motivation. For a seasoned member (or even an upstart member) of the Berkeley or Princeton faculty, studying Austrian economics is just not a career-enhancing activity."

Whether it's Ritholz, DeLong, Bartlett, Sullivan, Blinder, Krugman, Yglesias etc... none of these guys ever demonstrates any familiarity with the substance of the Austrian School. I must say this once a week. I'm totally flabbergasted because this never dawned on me until a few months ago.

We've gotten at least as far as having these Audit-the-Fed hearings. Still, the opposition has NOTHING in response other than ridiculous name calling and various straw men.

the economists dont want to study austrian economics because it eschews mathematic embarrasses can a pundit sound authoritative if he didnt wear the sacred thread (ok thats an Indian (asian) comparison).

btw,thats the precise reason,it is popular among blog readers!no intimidating equation.all that one needs is an acceptance of liberty .everything else follows
In the comments Bartlett uses John Law as "proof" that bubbles existed before the Fed. He is immediately shot down by someone who points out that "[a]ny serious history book on John Law explains that he was handling the printing press when he blew up his bubble."

Actually, it's even in the Wikipedia article!
Bartlett has been praised on occasion by Brad Delong. You don't need to know any more about him than that, really.

I've always known that mainstreamers don't like the Austrian School and mock it every chance they get. I understand that the "math" criticism is often used.

What I didn't realize until a few months ago is that none of the critics have bothered to understand any of it, even qualitatively.

It doesn't take math to know that if someone produces a counterfeit claim ticket for car at valet parking, and drives off in your car, that you have been robbed. Similarly, if the Fed creates new money and your old money loses purchasing power, you have been robbed. Quantitative analysis might help tell where your purchasing power went, but it doesn't prove or disprove that you have been robbed.

The mainstreamers avoid having to think about you being robbed by Fed money dilution.

It must be some Freudian avoidance thing going on (with apologies to Thomas Szasz).
That crap is unintelligible.

Ritholz is the worst writer in the history of the English language.
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