The problem with central banking can be articulated with just one sentence, Federal Reserve Governor Lisa D. Cook recently stated:
As policymakers, my colleagues and I make decisions that impact the entire country.
Unlike the local bakery which stays in business so long as it provides a valued service, the opposite is true for policymakers. What the Fed offers is decidedly against the public’s interest, but the public can hardly escape the Fed’s services.
With this concentration of power comes more questions, such as “what if policymakers make the wrong decisions or by their very nature are incapable of making the right ones?” Consider further remarks made by the Governor that speaks to a concerning lack of basic foundations of economics.
Diversity is essential in every profession. That is especially true in professions that thrive and evolve by answering questions, like economics.
Heartwarming. The media tells us diversity is good. Surely when a central banker speaks of it, it must be extra good! But when discussing economics, which apparently will “evolve by answering questions,” we should be referring to intellectual diversity, not physical diversity.
There is a 1971 audio recording of Mises doing a question and answer session. Near the beginning he states the questions he considers “the most important and most urgent,” regarding inflation. The synopsis asks:
What is inflation? What causes it? What are the effects?
These questions move economics forward. It should be the role of economists to advance the field of study by seeking answers that represent the real-world economy, not to centrally plan the world.
Half a century later, in an excerpt from Dr. Per Bylund’s latest book, he writes:
To form an understanding of how the economy works, we must be humble before the fact that it exists and there is an order to it—it has a nature. The task of the economist is not to predict the specifics of the future but to uncover the underlying processes that produce the economic outcomes that we can observe.
The Governor is honest, as economics does evolve through inquiry. But the Federal Reserve and mainstream economists stopped asking legitimate questions long ago. Both have become social messaging agents tasked with sculpting the future. They are not led by embracing thoughts different from their narrative. Rather, the only diversity the Board of Governors embraces are physical attributes.
Questions such as what is inflation have been purged from the lexicon of most PhD holders, replaced with non-economic matters such as how to achieve more diversity. As for using data to “impact the entire economy,” the Austrian could articulate how market intervention, such as expanding the money supply, has devastating consequences to the nation as a whole, and cite the history of such; this is the Austrian Business Cycle Theory.
Contrast this to the govern, who believes:
We are driven by data, which we collect in abundance.
The Fed’s ideology creates more answers than questions it resolves. Inquiry, self-reflection, acknowledgment of history and reality are all ignored. Instead, the Fed functions like a pre-programmed robot, where it’s only capable of sticking to the script. Whether championing physical diversity at the expense of intellectual diversity, or touting the predictive ability of data, no matter the devastating consequences to the masses, it will never stop.
The Fed plays a zero-sum game. It cannot give to one person without taking from another. History shows they give most generously to the already rich and powerful. Mainstream economists have proven themselves equally as impotent. But when more and more people start asking serious questions: “What is inflation; what are its causes and effects?” It should lead them first to scrutinize the system and then to change the system. Once understood, the fraudulent nature of the central banking system cannot be ignored.
