After one day of the report of the Federal Reserve to its future, met to consider the past. Went at least ten members of the Federal Open Market Committee, totaling 17 members to the Jekyll Island, away from the wetlands stretching south Georgia, to the centennial of the strangest missions in the history of American finance and the most secret.
Unlike politicians and a group of millionaires who met in 1910, who ended a week of plot and conspiracy to place the copy before the final, which later became the Federal Reserve, the Fed did not call it''modern''hunting ducks.
Never heard a President of the Federal Reserve, Ben Bernanke, and his former boss Alan Greenspan, they advocate the names of each other''and''righteousness''and''Orville in order to preserve confidentiality, as did two of the notables known in 1910. Given the history of the Federal Reserve, the Conference was held in an appropriate Gicquel free of tensions.
With the new agreement on a program to buy assets worth $ 600 billion, there was little of the tension that witnessed last two major conferences of the Federal Reserve in Jackson Hole in August (August), and in Boston at the beginning of October (October).
But there is still a lot of talk that dealt with policy makers, for reasons that date back to the Fed - or at least important parts of it - is the history of errors and subsequent efforts to correct them. And how to include the occurrence of such errors useful lessons for the time being.
Committed the gravest mistakes the Fed during the Great Depression. Including the notorious error, regarding the principle of''Billing the real''Real Bills Doctrine, under which the Fed lends only against commercial paper used to finance or trade stocks, not real estate and financial assets.
And this caused the Fed to reduce the money supply during periods of recession, while the number of such bills, also led to confusion between the low interest rates and easy credit terms.
The question is why the Fed took all that time to realize his mistake: here, the monetary policy-makers themselves, after the depression to work well.
Kalomeris said Charles, a professor of financial institutions in the Columbia School of Business, said part of the reason was the rapid growth and economic change, with the spread of innovations, such as radio, aviation, and skyscrapers, which made it difficult to learn from the effects of monetary policy. He added that learning is slow when you need it badly, and can be volatile times for learning and to make accountability difficult.
Applying the same principle today, Kalomeris wonder: Is QE 2 justification is now clear? The QE 2 is a nickname Aljdedep round of the Fed's monetary stimulus, or quantitative easing.
And now reluctant to echo occasions had been the payment of the Federal Reserve to fiscal policy, and thus risk losing his independence, because Congress did not want to move. For example, the Fed reluctant to become pregnant''bag''in Mexico in 1994, after Congress refused to approve a package of loans, as noted by Carven Godfrnd, from the University of Carnegie Mellon.
And live the Federal Reserve and a similar situation to that in our day. And can lose money with respect to securities backed by mortgages bought during the financial crisis, or in the QE 2 if it was to increase interest rates at a fast pace in the future.Greenspan said: If the Federal Reserve would put things in the budget, I believe that the U.S. Treasury obligation to remove the Federal Reserve (the risk). He added: should not be required from the Federal Reserve to keep those things in the budget.
Doing so creates a political threats (...) I think it explains itself. He cited Bernanke, who is considered the star pupil of the Great Depression, what Mvkran are great from the past to justify the Fed's actions present.
He said: It was Walter Bagehot, who put in the nineteenth century the foundations of what should be a central bank to do during a crisis, would be happy with what we have done, considering the quantitative easing 2 is what was Milton Friedman's economic''wants us to do''.
Bernanke argued that the quantitative easing 2 is not strongly different from the procedures of the Federal Reserve in the past. He said: This is the feeling that the quantitative easing, or the purchase of assets must be disposed of permanently, is strange, because we do not know what will happen, but it is inconceivable, and that policy can not be predicted, the same is the opposite of the truth.
This is precisely the monetary policy. That may be true in terms of content, but in fact, Bernanke is aware that history has not always been kind to the Fed policy makers, who did what seemed to them that it is clearly true at the time.
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