Unlike other bloggers, I don't do many of these. It's just not my style, and I don't expect much from the press to start with. But Steven Pearlstein's column from yesterday on the Fed made me want to end it all. It is so wrong about so many things that... ugh. For starters, there's this:
There are two easy fixes for this problem. Congress could extend the chairman's term from four years to six but remove the possibility of reappointment. ...
Who is the right person to preside over this new Fed? That's easy: Ben Bernanke.
I mean, come on. Those two mutually-exclusive thoughts were literally printed a mere four paragraphs apart. This is not some wonky, misinterpreting-the-numbers sort of mistake. This is something that no 4th-grader could get away with in English class. Just imagine:
Little Jimmy: Wolves should not eat the little piggies.
Teacher: Well then, who should eat the little piggies?
Little Jimmy: The Big Bad Wolf!
Teacher: That doesn't make any sense.
Little Jimmy: Well that's what the Washington Post says about it.
But wait, there's more! Pearlstein also advocates developing a deeper bench of Fed governors to (not) rely upon to (not) replace current Fed chairmen (who shouldn't be reappointed except when they should be). And how does he propose to develop this deep bench? By not filling vacant governorships. Just watch:
One way to develop a better farm system for the chairmanship would be to give more power, influence and visibility to the other governors, raising the bar so that those who are appointed show some promise of being chairman some day.
Pearlstein wrote that two paragraphs after writing this:
[Congress] could end the current practice of appointing new members of the Fed's board of governors to fill the partial, unexpired terms of governors who leave. All new governors should be appointed to their own 14-year terms, without possibility of reappointment.
Pardon me, but I don't think that Congress should be giving more power and influence to empty seats. Those are inanimate objects and should have as little power and influence as possible (I'm fine with more visibility if the seats are well-made and aesthetically pleasing). Now well-educated people, on the other hand, should have more power and influence. But Pearlstein made it clear that he doesn't think that we should fill empty seats with well-educated people even though there is no reason to not appoint someone smart to fill empty seats on the Board of Governors. None. Or, if there is it must be a secret because Pearlstein didn't mention it. There are two empty seats right now, and perhaps we could use the brains of two more smart economists as we try to dig out of this recession.*
But there's even more:
Whenever the Fed comes under serious attack, as it has recently, its reflexive response is to accuse its critics of jeopardizing the Fed's independence. Yet if you think about it, the greatest threat to the Fed's independence comes not from outside the institution but from a chairman and members who are so anxious to get reappointed that they begin to tilt policy to win favor with the White House or with Wall Street or take on a reluctance to criticize policies that they think harmful to the economy.
[sarcasm]Wow, really? You mean to tell me that people who are appointed to their jobs by the government will try to do things that please the government in order to keep their jobs? That thought had literally never occurred to me.[/sarcasm]
So how do we fix this clear conflict of interest? Well, if you think about it, the only possible solution is to remove all the vestiges of regulatory independence this country has and give more powers to the executive branch, because the executive branch has no political interests at stake and regulators in the executive branch don't care about keeping their jobs at all:
The Fed should be required to give up its duties as day-to-day bank regulator, handing those over to a single, consolidated supervisor, as Sen. Mark Warner of Virginia has proposed. It should also be forced to relinquish its largely unexercised powers to regulate abusive lending practices to the new consumer protection agency proposed by President Obama.
I know I'm laying it on pretty thick, but this butchering of logic is practically subhuman. I have no idea how much the Washington Post pays Steven Pearlstein, but I guarantee that I can do a better job in my spare time for 1/3 the cost. Think about it, Hiatt.
*A more charitable interpretation is that Pearlstein meant that Governors should get no more than 14 years on the Fed board, no matter the extenuating circumstances. But quite frankly, I see no reason to give Pearlstein the benefit of the doubt here, so I'm not going to. And anyway, the terms of Governors are staggered -- like those of Senators -- for a reason, and temporary appointments -- like those for vacated Senate seats -- are made to uphold that balance. In any case, Pearlstein literally offers no argument for why this practice should be abolished in the Fed (or the Senate), but he thinks it should be anyway. Just because.