Friday, February 12, 2010
Arnold Kling Smells a Fed Rat
I've said before (can't find the post) that Arnold Kling is my kind of cynic. Try this:
Rather than try to come up with an economic theory to explain Fed policy, I would suggest a more cynical approach. The goal has been to transfer wealth to banks and to the holders of mortgage securities. The thinking is that those constituents are more important to the economy than taxpayers.
...
The Fed has changed from a central bank to a piggy bank. Any economist who tries to interpret Fed policy from the standpoint of economic theory is playing a fool's game.
Comments:
The thinking is that those constituents are more important to the economy than taxpayers....The Fed has changed from a central bank to a piggy bank.
I don't think Mr. Kling is cynical enough. The purpose of the Fed was always to allow wealth transfers and the purpose of Keynesianism was always to place an impenetrable sheen of technocratic jargon over those wealth transfers. The Fed has always been a piggy bank. Further, the thinking was that those powerful constituents are more important than taxpayers, period. It had nothing to do with the economy.
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I don't think Mr. Kling is cynical enough. The purpose of the Fed was always to allow wealth transfers and the purpose of Keynesianism was always to place an impenetrable sheen of technocratic jargon over those wealth transfers. The Fed has always been a piggy bank. Further, the thinking was that those powerful constituents are more important than taxpayers, period. It had nothing to do with the economy.
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: February 12, 2010 at 11:21 AM
: February 12, 2010 at 11:21 AM Subscribe to Post Comments [Atom]
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