The Rodney Dangerfield of Nobel Prize Winning Economists

Whoa, Nobel Prize laureate and MIT Professor of Economics Peter Diamond has announced on the pages of NYT that he will withdraw his nomination for governor of the Federal Reserve System, because, like Rodney Dangerfield, and despite having been awarded a Nobel Prize in Economics, he is getting no respect.

In the angry Op-Ed titled, When a Nobel Prize Isn’t Enough, Diamond says:

I won the Nobel Prize in economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve — at least according to the Republican senators who have blocked my nomination. How can this be?....

But we should all worry about how distorted the confirmation process has become, and how little understanding of monetary policy there is among some of those responsible for its Congressional oversight. We need to preserve the independence of the Fed from efforts to politicize monetary policy and to limit the Fed’s ability to regulate financial firms.

This is pretty laughable given that the Nobel Prize has been so downgraded as a result of it being given to "economists" such as Paul Krugman, and when you look even more broadly and consider that President Obama was awarded the Nobel Peace Prize.

As for politicization at the Fed,  Diamond can be bent into all kinds of contorted positions, if it appears to be the politically correct thing to do. Last October, I wrote:

You really have to wonder how much this latest trio of Nobel Laureate economists are politicos rather than scientists at the core. We already witnessed Peter Diamond sellout on national television.

I wrote this as a follow-up to an earlier post detailing how Diamond ignored his own research on unemployment in an apparent attempt to play the political game:

I have already pointed out how Diamond is a major tinkerer/supporter of the Ponzi Scheme known as Social Security, but he went way over the top this morning as a guest on Fareed Zakaria's CNN show, GPS. He pretty much threw the theory, that got him the Nobel Prize, under the bus.

The Royal Swedish Academy of Sciences specifically stated they awarded The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2010 to Diamond, Mirtensen and Pissarides for: (my emphasis):

Peter Diamond has analyzed the foundations of search markets. Dale Mortensen and Christopher Pissarides have expanded the theory and have applied it to the labor market. The Laureates' models help us understand the ways in which unemployment, job vacancies, and wages are affected by regulation and economic policy. This may refer to benefit levels in unemployment insurance or rules in regard to hiring and firing. One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times.

Diamond, et al, used mathematical gobbledygook, but they do reach the correct conclusion that if you pay people not to work, it takes them a lot longer to find work.

So when Zakaria questions Diamond about the high unemployment, do you think Diamond would enlighten the television audience about what he discovered about unemployment, that won him the Nobel Prize (!)? That is, if you pay people not to work, they take longer to find work. Nope, doesn't mention a word about it. Instead he goes into Krugman/Keynesian type blather about weak aggregate demand. Does he not understand his own theory or, since he is up as a nominee for a Fed governorship, is he afraid to speak truth?

 In truth, the Diamond nomination will be replaced with another nominee who knows just as well which way the political winds blow, but who is perhaps a little  more amenable to the specific interests of key Republicans. But, it appears Congress, by messing with the Diamond nomination, has failed to spot one of its own. A willing sell out Diamond appeared to be. Nevertheless, it won't really matter who the replacement is. The Fed will continue to print money, manipulate interest rates and push the dollar further along the road to collapse. They won't let anyone get on the board who isn't carrying the Robert Mugabe inflation playbook.  The only hope this changes is from Ron Paul type agitation, which slowly makes more and more people aware of what the Fed is really all about.