Transcripts have been released from some Federal Reserve meetings in 2007. I haven’t read through any of the hundreds of pages, but the word on the pundit street is that, despite having a lot of information at their fingertips, the Fed kinda didn’t really at all anticipate the big crisis that was about to unfold. Apparently this revelation surprised some of the pundits, but it did not surprise me in the least.
There are many people who hate the Federal Reserve and wish it could be eliminated. Many of them, though not all, believe the Fed is a corrupt entity that deliberately manipulates the economy. There are also many people who love the Federal Reserve and wish it was even more powerful. Many of them, though not all, believe the Fed is made up of very Smart People who know exactly what needs to be done to “fix” the economy at any given moment.
These are opposing viewpoints, but they share a foundation that the Federal Reserve is, in some sense, “in control.” Either they know exactly what they are doing and are trying to destroy the currency to usher in a one-world government (or something), or they know exactly what they are doing and are trying to save the economy from impending collapse.
In contrast to both viewpoints, I have always suspected that the Federal Reserve is not in control. This comes from my worldview that the members of the Federal Reserve, like all other people, are flawed humans who do not know everything. They may be the Smartest People in the world, but they’re still not smart enough to accurately predict the future or the ways their actions can alter the future.
This viewpoint finds me pointing in the same general direction as the Austrians and gold bugs and other anti-Fed folks, though not (usually) for reasons of conspiracy so much as for reasons of limited knowledge. As with the explicit branches of government, I am concerned about concentrating too much power in the hands of too few people. I am concerned about the Oops Cost of the powerful mistakes these powerful people can make.
I have said before and I will say again that I have been impressed by how non-terrible the consequences of the Fed’s actions have been so far since the big crisis. (Still waiting on that hyperinflation, right?) I believe these folks are doing their best to keep employment up and inflation down, etc, yet I remain highly skeptical that they really know what they are doing. I am encouraged that some of the pundits appear to be awakening to that view as well. If only it would lead them to become more generally skeptical of such concentrated power…