The low quality of some Fed Governors and the freedom to “speak-out”!

Take, for example, Kevin Warsh who served between 2006 and 2011. He´s out today in the WSJ critiquing the so called Fed easy policy:

In the coming weeks and months, financial-market participants will try to gauge whether the change in personnel at the Fed means a change in policy. In particular, they will seek to divine whether Ms. Yellen’s views on quantitative easing will lead to still more asset purchases and a longer period of near-zero interest rates.

This line of inquiry is understandable, but the fate of monetary policy and the economy is about much more. The critical issues go to the very remit of the Fed, the efficacy of its tools, its rightful place in government, and its role in the global economy. Allow me to highlight—and then question—some of the prevailing wisdom at the basis of current Fed policy:

All through the difficult times in 2008-09-10 and early 2011, Mr. Warsh not once disputed FOMC decisions by casting a dissenting vote (maybe in 2010 he used Thomas Hoenig, who dissented in all meetings, as proxy).

Read the whole article here.

About the Author

Marcus Nunes
João Marcus Marinho Nunes is a partner of Phynance Estratégias Quantitativas e Investimentos and a professor of Economics at Fundação Getúlio Vargas in São Paulo, Brazil. He also blogs here: http://thefaintofheart.wordpress.com/

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