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09-11-2009, 01:17 AM #1
HuffPo: "How the Federal Reserve Bought the Economics Profession"
There's a reason the "mainstream" didn't see the financial crisis coming: the crisis was created almost entirely BY the Federal Reserve, and they control the "mainstream" economics profession.
"A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another."
"...There are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed -- or who hope to one day soon -- and you've accounted for a very significant majority of the field."
Milton Friedman: "You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results..."
"I've been blackballed from the Fed summer conference at Jackson Hole, which I used to be a regular at, ever since I criticized him," Krugman said of Greenspan in a 2007 interview with Pacifica Radio's Democracy Now! "Nobody really wants to cross him."
An invitation to the annual conference, or some other blessing from the Fed, is a signal to the economic profession that you're a certified member of the club. Even Krugman seems a bit burned by the slight. "And two years ago," he said in 2007, "the conference was devoted to a field, new economic geography, that I invented, and I wasn't invited."
09-11-2009, 02:58 AM #2
It’s also worth noting that the Fed overwhelmingly subscribed to the “efficient market” theory and are (were?) acolytes of the New-Chicago neoclassical school. Point being, abolishing the Fed is not a solution to the problem; instead, a focus on the fundamentals of the economy like balanced budgets, managing the trade deficit, and other realities of finance should be given more weight and more importance than overreaching ideological theories.
The thing that most macro-economists working for the Fed or working for Think Tanks forget is that most of economics is actually micro and what we call macro should really be called “political economy.”