The Federal Reserve is definitely working hard to justify its existence. Quarterly press conferences, a blog, and an appearance earlier this month "one county over" from mine by a regional Fed employee, speaking to an economic development group.
I didn't attend that program, but wonder how the central planners might have looked, scooping up the pearls of wisdom as they rained down from the lips of the polished and erudite central banker.
Today an economist from the regional Fed came to my town to speak at the city's recreation center. This was part of a major extravaganza, that being the opening of a month-long exhibit at the rec. center from the Smithsonian, titled, "The Way We Worked." There is an amazing irony here, and it is this: this facility does typify the way government has been working, because in the decade or so that it's been open, its expenditures have increasingly exceeded revenues every year--the deficit was about $250,000 last year.
Back to the speech. It was essentially a slideshow, with graphs showing various plots of economic parameters over time. Most of the graphs made perfect sense to me, in that they represented CPI, or household formation, or new home starts, you get the idea, versus time. Most of them showed a major perturbation just where we all expected them to--2008. Nothing very surprising. I was a bit annoyed when I heard him say, "See how the unemployment curves for less-educated individuals are above those of more-educated individuals...we all know that more education produces more employment."
Do we? Maybe education and employment co-assort; that is, smarter and more ambitious people both get more education and more employment. Maybe there's a correlation but not a causal relationship between the two. Well, it's probably a fine point.
We did get a chance to ask questions, and I was pleasantly surprised that the questions didn't have to be submitted in advance for "approval", as I've experienced elsewhere. There were a few questions about what I think of as peripheral things, which are to be expected when there is a man-made creation of such opacity and unnecessary complexity as a central banking system. One man was definitely far out "in the weeds," as they say. But I just had to get the speaker's opinion on something that has bothered me quite a bit lately.
"Many in the Fed, including Ben Bernanke, have said that the Fed needs to remain independent to protect it from political pressure. But we have a wonderfully representative government, and the Constitution says in Article I, Section 8, that it is the duty of Congress to "coin money and regulate the Value thereof...." The Federal Reserve absolutely affects the purchasing power of the money--the means of exchange--but the people have no representation. Can you deny that the citizens have been disenfranchised by this arrangement?"
He said, in part, "I have a book , signed by the author...it was given to me as a gift, probably a joke....Congress created the Federal Reserve...."
"It sounds like you agree with me, that the citizens have been disenfranchised," I replied.
Now comes the good part.
He was asked about some of the bailouts. Then he recounted some of the failings of the Cash for Clunkers program...it removed used cars from the market, it compressed new car sales into a shorter window without increasing overall the numbers of cars sold, in short, he said that he didn't think it was very well designed.
Then he said...wait for it...he had a car that got 13 mpg that he wanted to get rid of, and he took advantage of Cash for Clunkers for himself.