"I have a confession to make: I love the Federal Reserve."

Federal Reserve policy
meeting room

The world's greatest economic textbook hustler, Harvard economist Greg Mankiw, writes in The New York Times:

"I have a confession to make: I love the Federal Reserve."

He then goes on to attack the two clowns President Trump has nominated for positions of the Federal Reserve Board, Stephen Moore and Herman Cain. But he does so from such an elitist establishment perspective that any decent person could almost feel sorry for these two Trump flunkies.

By way of introduction, Mankiw identifies Moore as:

Mr. Cain has been a pizza company executive and a presidential candidate, but he has no degree in economics and scant experience in finance.

Mankiw fails to mention that Cain was chairman of the Federal Reserve Bank of Kansas City Omaha Branch from 1989 to 1991. He was deputy chairman, from 1992 to 1994, and then chairman until 1996, of the Federal Reserve Bank of Kansas City. In 1994.

As an Austrian school economist, this is not impressive to me but, from an establishment perspective, it looks to me that Cain has better credentials than Mankiw for a Fed governorship.

That said, Mankiw also talks about the Fed in reverential tones:

The second ingredient to the Fed’s success are the talented people who dedicate their lives to it. Every year the Fed recruits new research assistants from top colleges and new staff economists from top Ph.D. programs in economics... 

We may not have many great public institutions left. But the Federal Reserve is one of them. 

Of course, this is flat out nonsense.  As I report in my book, The Fed Flunks: My Speech at the New York Federal Reserve Bank, top Fed economists made comments to me that indicate they didn't even know the difference between the Austrian school of economics and the Chicago school.

And as far as the Fed being a great institution, in The Fed Flunks I point out that, since the start of the Fed operations in 1914, price inflation has pushed prices higher by more than 2,400% and there have been 18 recessions including the Great Depression and the most recent Great Recession. That's quite the track record for a "great institution."

I have a confession to make: I hate the money manipulating, business cycle creating, inflation creating Fed.


Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.com and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank and most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.