Comments on: How Powerful or Wise is the Federal Reserve? http://alephblog.com/2007/10/30/how-powerful-or-wise-is-the-federal-reserve/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Tue, 16 Mar 2010 21:21:52 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: phyron http://alephblog.com/2007/10/30/how-powerful-or-wise-is-the-federal-reserve/comment-page-1/#comment-7757 phyron Thu, 01 Nov 2007 11:54:45 +0000 http://alephblog.com/2007/10/30/how-powerful-or-wise-is-the-federal-reserve/#comment-7757 Just one point... Everything you say...and I mean everything...has been and is anticipated by the FED... Your scepticism deserved or not, indeed your desire to Blog it, itself, is part of the FED's "problem"... You're a rat in the cage... where even your idiosyncratic behavior has not only been forecast.. but is counted on to achieve expectational equilibrium... By the way just a technical comment.. there are no Economists outside the FED... every "serious" economist dealing in monetary theory.. and i don't mean the Wall Street drop outs who couldn't get tenure... is essentially bought and paid for by the FED... Although a good post.. sadly is just another piece of "data".. to those outside the cage and feeding you pellets.. Just one point…
Everything you say…and I mean everything…has been and is anticipated by the FED…
Your scepticism deserved or not, indeed your desire to Blog it, itself, is part of the FED’s “problem”… You’re a rat in the cage… where even your idiosyncratic behavior has not only been forecast.. but is counted on to achieve expectational equilibrium…
By the way just a technical comment.. there are no Economists outside the FED… every “serious” economist dealing in monetary theory.. and i don’t mean the Wall Street drop outs who couldn’t get tenure… is essentially bought and paid for by the FED…
Although a good post.. sadly is just another piece of “data”.. to those outside the cage and feeding you pellets..

]]> By: rich t http://alephblog.com/2007/10/30/how-powerful-or-wise-is-the-federal-reserve/comment-page-1/#comment-7712 rich t Wed, 31 Oct 2007 17:59:21 +0000 http://alephblog.com/2007/10/30/how-powerful-or-wise-is-the-federal-reserve/#comment-7712 Very insightful post... Very insightful post…

]]> By: Jeff http://alephblog.com/2007/10/30/how-powerful-or-wise-is-the-federal-reserve/comment-page-1/#comment-7709 Jeff Wed, 31 Oct 2007 15:40:00 +0000 http://alephblog.com/2007/10/30/how-powerful-or-wise-is-the-federal-reserve/#comment-7709 You are correct in thinking this is controversial. If the Fed gave in to political pressures the way you suggest, there would never be a tightening cycle! When I look at the Fed, I try to do so using the approach of the professional political scientist in both methods and data. We have plenty of information from those who have served there, and the data do not support your model of political pressure. Just because they reach the same conclusion as political actors, while looking at the same evidence, does not mean that the politicians caused the change. Maybe they see the evidence differently from you. I am particularly bothered by your statement that having a lot of good economists means that you will miss turning points. What is your evidence for that? It is true that a lone cowboy forecaster will predict more turning points, but that does not mean he will be correct. Most of those calling for turning points make many, many serious errors. Turning points occur relatively infrequently and are difficult to predict. Weather forecasters fail to predict hurricanes also. Evaluating forecasting requires a careful methodology for analyzing past records. For anyone interested, I have written about this trying to provide some other examples. http://oldprof.typepad.com/a_dash_of_insight/2007/08/forecasting-unl.html http://oldprof.typepad.com/a_dash_of_insight/2007/09/the-outcome-bia.html You are correct in thinking this is controversial.

If the Fed gave in to political pressures the way you suggest, there would never be a tightening cycle! When I look at the Fed, I try to do so using the approach of the professional political scientist in both methods and data. We have plenty of information from those who have served there, and the data do not support your model of political pressure.

Just because they reach the same conclusion as political actors, while looking at the same evidence, does not mean that the politicians caused the change. Maybe they see the evidence differently from you.

I am particularly bothered by your statement that having a lot of good economists means that you will miss turning points. What is your evidence for that? It is true that a lone cowboy forecaster will predict more turning points, but that does not mean he will be correct. Most of those calling for turning points make many, many serious errors.

Turning points occur relatively infrequently and are difficult to predict. Weather forecasters fail to predict hurricanes also. Evaluating forecasting requires a careful methodology for analyzing past records. For anyone interested, I have written about this trying to provide some other examples.
http://oldprof.typepad.com/a_dash_of_insight/2007/08/forecasting-unl.html
http://oldprof.typepad.com/a_dash_of_insight/2007/09/the-outcome-bia.html

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