Wednesday, July 15, 2009

Fed Friendly Economists In Panic Mode Over Ron Paul Audit Legislation

A group of Federal Reserve friendly economists have launched a petition calling on the Executive Branch and Congress to not intefere with the Federal Reserve. Here's the full text of the petition:

Open Letter to Congress and the Executive Branch

Amidst the debate over systemic regulation, the independence of U.S. monetary policy is at risk. We urge Congress and the Executive Branch to reaffirm their support for and defend the independence of the Federal Reserve System as a foundation of U.S. economic stability. There are three specific risks that must be contained.

First, central bank independence has been shown to be essential for controlling inflation. Sooner or later, the Fed will have to scale back its current unprecedented monetary accommodation. When the Federal Reserve judges it time to begin tightening monetary conditions, it must be allowed to do so without interference. Second, lender of last resort decisions should not be politicized.

Finally, calls to alter the structure or personnel selection of the Federal Reserve System easily could backfire by raising inflation expectations and borrowing costs and dimming prospects for recovery. The democratic legitimacy of the Federal Reserve System is well established by its legal mandate and by the existing appointments process. Frequent communication with the public and testimony before Congress ensure Fed accountability.

If the Federal Reserve is given new responsibilities every effort must be made to avoid compromising its ability to manage monetary policy as it sees fit.

It's hard to believe that it is actually economists that put this hazy letter together. They write:
..central bank independence has been shown to be essential for controlling inflation
Do they have any clue how much money was printed (i.e. monetary inflation) that caused the current boom/bust cycle? Do they have any clue how many dollars the Fed has printed that are being held by the Chinese, that the Chinese want to desperately get rid of?

They go on:

Second, lender of last resort decisions should not be politicized.
Is this a joke or what? Did Bernanke and Paulson not politicize the bailout process by allowing Lehman and Bear Stearns to crash, but bailed out Goldman Sachs (via AIG) to the tune of billions?

They continue:

The democratic legitimacy of the Federal Reserve System is well established by its legal mandate and by the existing appointments process. Frequent communication with the public and testimony before Congress ensure Fed accountabilityThis group is clearly afraid of an audit of the Fed. How else can they possibly claim that the Fed is now transparent?
I really fear that any audit of the Fed may be co-opted by big governemnt types, but Ron Paul is clearly on to something. The Fed and their allies appear to be in full panic mode. What are they afraid Ron Paul will discover?

For the record, here are the creators and intial signers of the document:

Ricardo Caballero, Massachusetts Institute of Technology
Kenneth French, Dartmouth College
Robert Hall, Stanford University
Anil Kashyap, University of Chicago Booth School of Business
Pete Klenow, Stanford University
Frederic Mishkin, Columbia University
Thomas Sargent, New York University
Michael Woodford, Columbia University

Here are all who have signed the document:

Name Affiliation
1 Ricardo Caballero MIT
2 Kenneth French Dartmouth College
3 Robert Hall Stanford
4 Anil Kashyap Chicago Booth
5 Pete Klenow Stanford
6 Frederic Mishkin Columbia
7 Thomas Sargent NYU
8 Michael Woodford Columbia
9 Andrew Abel Wharton School, University of Pennsylvania
10 Daron Acemoglu MIT
11 Michael Adler Columiba University
12 Yacine Ait-Sahalia Princeton University
13 Fernando Alvarez University of Chicago
14 Scott Anderson Wells Fargo & Co.
15 Cliff Asness Managing and Founding Principal, AQR Capital Management LLC
16 Paul Asquith Massachusetts Institute of Technology
17 David Backus NYU
18 Dean Baim Pepperdine University/UCLA
19 Ravi Bansal Duke University
20 David Bates University of Iowa
21 Andrew Bernard Dartmouth College
22 Richard Berner Morgan Stanley
23 George Borts Brown University
24 Scott Brown Raymond James & Associates
25 Markus K. Brunnermeier Princeton University
26 Ralph C. Bryant Brookings Institution
27 Michael Carey Calyon Securities (USA) Inc. Credit Agricole Group
28 Christopher Carroll Johns Hopkins University
29 Martin Cherkes Columbia University
30 Diego Comin Harvard University
31 Jernej Copic UCLA
32 Dora Costa UCLA
33 Steven Davis University of Chicago Booth School of Business
34 Angus Deaton Princeton University
35 Davide Debortoli University of California, San Diego
36 Eddie Dekel Northwestern University
37 Harold Demsetz UCLA
38 Scott Desposato University of California, San Diego
39 Douglas Diamond University of Chicago Booth School of Business
40 Peter Diamond MIT
41 Francis X. Diebold University of Pennsylvania
42 Avinash Dixit Princeton University
43 Darrell Duffie Stanford
44 Pierre Collin Dufresne Columbia
45 Martin Eichenbaum Northwestern University
46 Andrea Eisfeldt Northwestern University Kellogg School of Management
47 Jeffrey Ely Northwestern University
48 Eduardo Engel Yale University
49 Eugene Fama University of Chicago Booth School of Business
50 Henry Farber Princeton University
51 Roger Farmer UCLA
52 Jon Faust Center for Financial Economics, Johns Hopkins U.
53 Michael Feroli J.P.Morgan
54 Wayne Ferson U.S.C.
55 Kristin Forbes MIT-Sloan School of Management
56 Mark Gertler New York Univiersity
57 Marc Giannoni Columbia University
58 Simon Gilchrist Boston University
59 Robert J. Gordon Northwestern University
60 Roger Gordon UCSD
61 David Greenlaw Morgan Stanley
62 Gene Grossman Princeton University
63 Steffen Habermalz Northwestern University
64 James Hamilton University of California, San Diego
65 Gary Hansen UCLA
66 Robert Hansen Tuck School, Dartmouth College
67 Gordon Hanson UC San Diego
68 Milton Harris University of Chicago Booth School of Business
69 Tarek Hassan University of Chicago Booth School of Business
70 Zhiguo He Chicago Booth
71 John Heaton University of Chicago
72 D. Lee Heavner Analysis Group, Inc.
73 Christian Hellwig UCLA
74 Gailen Hite Columbia Business School
75 Yael Hochberg Kellogg School of Management, Northwestern University
76 Stuart Hoffman PNC Financial Services Group
77 Bengt Holmstrom MIT
78 Bo Honore Princeton University
79 Peter Hooper Deutsche Bank
80 Takeo Hoshi University of California, San Diego
81 Christopher House University of Michigan
82 Peter Howitt Brown University
83 Chang-tai Hsieh University of Chicago
84 Ellen Hughes-Cromwick Chief Economist, Ford Motor Company
85 John Huizinga University of Chicago Booth School of Business
86 Erik Hurst University of Chicago Booth School of Business
87 Ravi Jagannathan Kellogg School of Management, Northwestern University
88 Dana Johnson Comerica Bank
89 Karen Johnson Federal Reserve Board of Governors (retired)
90 Charles I. Jones Stanford University, Graduate School of Business
91 Paul Joskow MIT
92 Matthew Kahn UCLA
93 Juno Kang The Bank of Korea
94 Steven Kaplan University of Chicago Booth School of Business
95 Bruce Kasman J.P. Morgan Chase
96 Peter Kenen Princeton Uniiversity
97 Ralph Koijen University of Chicago Booth School of Business
98 David Kotok Chariman, Central Banking Series, Global Interdependence Center,
Philadelphia, PA.
99 Arvind Krishnamurthy Northwestern University
100 Rafael La Porta Dartmouth College
101 David Lake University of California, San Diego
102 Bruce Lehman UCSD
103 Nan Li Ohio State University
104 Hilarie Lieb Northwestern University
105 John Liew AQR Capital Management
106 Juhani Linnainmaa University of Chicago Booth School of Business
107 Andrew Lo MIT
108 Kevin Logan Dresdner Kleinwort
109 Guido Lorenzoni MIT
110 Hanno Lustig UCLA Anderson
111 Louis Maccini Johns Hopkins University
112 Burton Malkiel Princeton University
113 Eric Maskin The Institute for Advanced Study, Princeton University
114 Robert McDonald Kellogg School, Northwestern University
115 Daniel McFadden University of California, Berkeley
116 Doug McMillin Louisiana State University
117 Rajnish Mehra UC Santa Barbara
118 Robert Mellman J.P. Morgan
119 Robert Merton Harvard University
120 Laurence Meyer Macroeconomic Advisers, LLC
121 Atif Mian University of Chicago
122 Gregory Miller Suntrust Banks, Inc.
123 Robert Moffitt Johns Hopkins University
124 Stephen Morris Princeton University
125 Dale Mortensen Northwestern University
126 Giuseppe Moscarini Yale University
127 Tobias Moskowitz University of Chicago, Booth School of Business
128 Stefan Nagel Stanford
129 Maurice Obstfeld University of California, Berkeley
130 Lee Ohanian UCLA
131 Maureen O'Hara Cornell University
132 Stavros Panageas University of Chicago Booth School of Business
133 Dimitris Papanikolaou Northwestern University
134 Robert Parry President & CEO, Federal Reserve Bank of San Francisco, Retired
135 Lubos Pastor University of Chicago Booth School of Business
136 Lasse H. Pedersen NYU
137 Monika Piazzesi Stanford
138 Keith Poole University of California, San Diego
139 Giorgio Primiceri Northwestern University
140 Valerie Ramey University of California, San Diego
141 Enrichetta Ravina Columbia University
142 Esteban Rossi-Hansberg Princeton University
143 Michael Rothschild Princeton University
144 Tano Santos Columbia Business School
145 Ulrike Schaede University of California, San Diego
146 Richard Schmalensee MIT
147 Martin Schneider Stanford
148 Kermit Schoenholtz NYU Stern School of Business
149 Jay Shanken Emory
150 Robert Shiller Yale University
151 Hyun Shin Princeton University
152 Stephen Shore Johns Hopkins University
153 Costis Skiadas Northwestern University
154 Matthew Slaughter Dartmouth College
155 James F. Smith Kenan-Flagler Business School, UNC-Chapel Hill
156 Chester Spatt Carnegie Mellon University
157 James H. Stock Harvard
158 Rene Stulz The Ohio State University
159 Amir Sufi University of Chicago Booth School of Business
160 Joseph Swanson Northwestern University
161 Vefa Tarhan Loyola University Chicago
162 Edwin M. Truman Peterson Institute for International Economics
163 Harald Uhlig University of Chicago
164 Andrey Ukhov Northwestern University
165 Sergio Urzua Northwestern University
166 Chris Varvares Macroeconomic Advisers, LLC
167 Pietro Veronesi University of Chicago
168 Paul Wachtel New York University, Stern School of Business
169 Richard Walker Northwestern University
170 Mark Watson Princeton
171 Shang-jin Wei Columbia
172 David Weil Brown University
173 Pierre-Olivier Weill UCLA Economics
174 Burton Weisbrod Northwestern University
175 William Wheaton MIT
176 Michael Whinston Northwestern University
177 Mirko Wiederholt Northwestern University
178 Mark Witte Northwestern University
179 Tiemen Wouteren Johns Hopkins University
180 Jonathan Wright Johns Hopkins University
181 Wei Xiong Princeton University
182 Stanley Zin New York University


  1. Comes the revolution, i'm not sure having put one's name on a document like this will prove to have been a particularly wise move...

  2. Wenzel, you economists are a funny lot.Maybe 5 out of the 182 have a clue as to the true meaning of this letter.
    The rest are desperate for the "prestige" of sucking on a higher-up government teat than the common folk.

    More than the desperation apparent in the letter, I recognized the veiled threat that "...calls to alter the structure or personnel selection of the Federal Reserve System easily could backfire by raising inflation expectations and borrowing costs and dimming prospects for recovery"

    Who knows, maybe the FEDs are the smartest guys in the world- they've got the rest of us happily lapping at every spilt drop they waste.

  3. It is a matter where economists become bewitched by their own concoctions and become a victim of their own economic elixir to the point of agreeing on a market place that is not transparent.

    It is a tragedy to see this list of scholars again revealing the lack of real world business experience and practicing an other world like type of economics that will hold the average american captive.

    Hopefully, the average American will demand their rights and remove these veiled conspiring entities. It is bad enough that Paulson is free from conspiracy as he basically arranged for 13 billion dollars to flow from tax payer pockets to AIG then to Goldman Sach's his previous Employer.

    When will it stop?

  4. Looks to me like the Fed is settled science. No more debate is required. The rest of you are just deniers.

  5. These are very mainstream economists, unfortunately, but of course there are plenty of others who would not agree. Do these folks perhaps not know that the Fed considers itself acting under emergency powers in which the Treasury in effect has a seat at the Fed table? Fed actions are not currently independent of the Treasury, which makes the idea of an independent Fed somewhat irrelevant now - the independence of the Fed is already compromised. The lack of accountability regarding exactly what the Fed has been buying from whom in the private sector seems pretty indefensible to this economist, particularly when we are talking of literally trillions of dollars being spent.

    Good post by the way.

  6. the audit of the FED has to happen. Unfortunately, these bastards have the power to murder people, like Ron Paul, and some of the other proponents of the bill. If the audit does happen, then the gig will be blown and everyone will know what we already suspect and intuitively know, is that the FED is a bunch of bullshit and propaganda and as phoney as the 3 dollar bills they used to make on office copiers.

    we're gonna have to make sure this comes to fruition. Audit the FED means NO MORE EUROPEAN BANKER SLAVERY FOR THE U.S.

  7. "The truth shall set you free"
    AUDIT THE FED...and no, not a rigged, politicized audit. I mean the real deal.

    Let's do that and see what's under the hood. After that there can be rational debate.

  8. fed is settled science? what the hell does that even mean? the fed has never done a shred of good for anyone other than the elite that control it. In their eyes there are two kinds of people, the "have's" and the "have-nots" if you are a member of a "have-nots" they will do EVERYTHING in their power to prevent you from being in their exclusive group. the federal reserve is a cancer and must be stopped ASAP.

  9. The most hypocritical part of the whole trite pleadings comes in the form of "The democratic legitimacy of the Federal Reserve System is well established by its legal mandate and by the existing appointments process. Frequent communication with the public and testimony before Congress ensure Fed accountability."

    The FED is illegal based on the Constitution which gives Congress and Congress only to issue money and set its value. secondly there is absolutely no accountability to the Government as stated by Greenspan, Bernanke et al regarding their autonomous position and private interests of the shareholder banks. These economists should be seen as traitors and dealt with as such.

  10. Looks like 182 perfessers and banksters are on the take.

  11. No more loans for Obama from China, China caught on! Now what? It is going to take one hell of a shell game to get the U.S. past its debt problems this time, and now, the world is watching, with the 'Yuan" on the sidelines, ready to take over the most lucrative shell game mankind has ever known! Next chapter, "The demise of the American Empire?"

  12. The Fed has already been politicized and co-opted by big government types by its very nature and origins.

    I wonder how many of these 182 are or have been employed or recieved research funding from the Fed?

  13. looks like they have the FED:s pay roll there :)

  14. Not one of those economists called the crisis or warned the public of it. They are the most compliant puppets that exist. They know nothing. What ever they say do the exact opposite.

  15. "Democratic legitimacy"???? Everybody who knows the history of the Fed knows it was "passed" by a tiny clique of senators who lied to their colleagues about not conducting any business while everyone else was home for Christmas. Then the bill was swiftly signed by Woodrow Wilson, who was bought and paid for by the banking interests for just that purpose. And the 16th amendment, a necessary legislative adjunct to attach the Fed's money milking machine to the public teat, has been shown to have never been approved by the required 3/4 of state legislatures.

    There's nothing democratic about the Fed -- it was rammed down our throats by corruption and deceit.

  16. Academic Hacks And Flacks Seek To Keep Fed Problem ABSTRACT, Denying Concrete COUNTERFEIT Reality, Fraud
    (Apollonian, 16 Jul 09)

    Entire key to this affair regarding the Fed is really simple: IT'S A COUNTERFEITING SCAM, pure and simple. Once enough people get this CONCRETE counterfeit nature clear in their minds, the game is up. But what could possibly distract folks but another false-flag attack?--and people are evermore hip to that too. No wonder masterminds are panicked.

    Why has it, this Fed counterfeit racket, been allowed to go on now for so long (almost a hundred yrs)?--well, it paid, but now too many need to be paid-off, and the top-most masterminds are at odds w. one another.

    Another reason the scam worked so well is the hubristic people who became so adept at fooling themselves. People lost sight of the simple CONCRETE (counterfeit fraud) in midst of vague and complex ABSTRACTIONS, like "capitalism," "inflation, and "banking," etc.

    It's like when we were young, we'd use "big-words" and phrases to impress people we were smart and like "grown-up." But using those "big words" and phrases, like "central banking" and "fractional-reserve money and banking," has caused us all to lose sight of the real thing we really wanted to mean--COUNTERFEITING, once again.

    And so who are these flacks and hacks who signed the letter defending the "independence" of the Fed?--they're precisely the very ones who foment this vague and fuzzy world of ABSTRACTIONS by which people are kept confused and lost within the haze of half-baked "thoughts" with little to no connection to actual CONCRETE reality.

    And of course criminals and counterfeiters want "independence" fm supervision and accountability--isn't that just natural and typical for such psychopaths and criminals?

    CONCLUSION: Thus we see the criminals losing their cool--but still, the "good-guys" need a clear philosophy/strategy of their own to unite the people in meaningful, positive, substantial manner. And this unity, I suggest, should be founded upon that same Christian inspiration of Gosp. JOHN theme, TRUTH vs. lies and conspiracy. For note the countefeit criminals and conspirators are also anti-Christ too--and it's NOT mere co-incidence. Honest elections and death to the Fed. Apollonian

  17. For the record, here are the creators and initial signers of the document:

    Ricardo Caballero, Massachusetts Institute of Technology

    “visiting scholar and consultant at the European Central Bank, the Federal Reserve Board, the Inter-American Development Bank, the International Monetary Fund, the World Bank, as well as at central banks and government institutions throughout the world” MIT bio

    Kenneth French, Dartmouth College

    No known direct association

    Robert Hall, Stanford University

    “has advised a number of government agencies on national economic policy, including the Justice Department, the Treasury Department, the Federal Reserve Board, and the Congressional Budget Office” Stanford bio

    Anil Kashyap, University of Chicago Booth School of Business

    “spent three years as an economist for the Board of Governors for the Federal Reserve System. He currently works as a consultant for the Federal Reserve Bank of Chicago, and serves as a member of the Economic Advisory Panel of the Federal Reserve Bank of New York” U Chicago bio

    Pete Klenow, Stanford University

    “2000-2003: Senior Economist, Federal Reserve Bank of Minneapolis” Stanford CV

    Frederic Mishkin, Columbia University

    “from September 2006 to August 2008 was a member (governor) of the Board of Governors of the Federal Reserve System. . . [f]rom 1994 to 1997 he was Executive Vice President and Director of Research at the Federal Reserve Bank of New York and an associate economist of the Federal Open Market Committee of the Federal Reserve System.” Columbia bio

    Thomas Sargent, New York University

    “June, 1971 – June 1987 Advisor, Federal Reserve Bank of Minneapolis” NYU resume

    Michael Woodford, Columbia University

    “Visitor, Research Department, Federal Reserve Bank of Minneapolis, November 1987. . . Consultant, Research Department, Federal Reserve Bank of New York, 1995-1997. . . Visitor, Division of Monetary Affairs, Federal Reserve Board of Governors, September 1996. . . Visitor, Division of Monetary Affairs, Federal Reserve Board of Governors, July 1998.
    Visitor, Research Department, Federal Reserve Bank of Kansas City, August 1998. . . Visitor, Research Department, Federal Reserve Bank of Atlanta, August 2000. . . Visitor, Division of Monetary Affairs, Federal Reserve Board of Governors, July 2002. . . Visitor, Division of Monetary Affairs, Federal Reserve Board of Governors, April 2003. . . Visiting Scholar, Federal Reserve Board, June 2008.” Columbia CV

    “serves on a Monetary Policy Advisory Panel for the Federal Reserve Bank of New York” Columbia bio

  18. They REALLY should have read the fine print!

  19. Take everyone that signed that document and indict them for Treason.

  20. If this doesn't show the complete fraud of the USA, I don't know what does.
    The professors are, well, just morons that couldn't do any real productive work. I'm very serious. These guys are, for the most part, nerds with jobs. They know how to suck up to those above. They are clueless, helpless, but very dangerous because the MSM has designated them to be smart. They are believed by the great unwashed, and those that believe everything written in the NYT.
    The banksters are simply trying to keep the gravy train on the track. And, my experience with banksters leads me to believe, the signers are not much better. The real manipulators are very far removed from the day to day operations. Think of the Geithners, the Paulsons, the kissingers, et al as highly compensated office boys. They implement the plan that is given to them.

  21. Secrecy works to sustain a monetary system that is at its core built on debt and the continual expansion of the money supply. Look at the elimination of M3 tracking. Eventually the amount of money that needs to be earned or borrowed exceeds the capacity to pay back existing debt.

    The central bankers got too greedy. They've expanded the money supply through shadow banking, with derivatives trading that exceeds the depository base by many multiples. Annoited banks are able to borrow the people's money--and use Federal Reserve credit through discount windows and special programs, to the tune of $12 trillion.

    Now if Congress were in sole control of the money supply, it'd be spent without restraint or condition. These economists appear to be complaining about the threat of political control over the monetary system, which is a serious issue. But the Fed is hardly independent either--they've pledged to serve the interests of financial elite which at this time means trying to re-inflate the private credit money bubble that's collapsed. Clearly the proposed increase in Fed regulatory responsibilities is an attempt to further align the interests of the private sector with monetary policy, and remove the threat posed by political meddling by people like Paul, under the assumption regulations will end the profitability of unregulated trade in derivatives.

  22. Regardless of what happens with this legislation The Fed is Dead as far as the rest of the world and will no longer be able to function. Capitulation will be hard but eventually they will fall into the pit they dug for the rest of us. The desperation is so obvious now. Nothing will stop this movement because nothing they do will make the economy or their version of the banking system function past a certain point. They have very little options left except total dictatorship and Obama will never get it. The guns are being readied as we speak.

  23. It is getting to the point where the only solution for american citizens may be a revolution. It seems nothing else will return the highjacked satanic government of the United States back to serving the people instead of the warlords. CONGRESS DOES NOT LISTEN FOLKS AND DOES NOT CARE. FRANKLY, THEY DON'T GIVE A DAMM WHAT CITIZENS THINK.

  24. You will notice that most of these signers are working for publicly funded universities. They have high salaries courtesy of taxpayers, health care courtesy of taxpayers and are protected by tenure so there are not at risk of unemployment driven by these theoretically wise, non political FED decisions. I doubt that many of them have ever worked in any productive capacity. I doubt thatmany have worked much outside the cocoon of academia. When they have a dog in the fight, when they are subject to the job insecurity and declining wages the rest of us see, I wonder if they will be such great fans of the FED?

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