Wednesday, May 9, 2012

Economists controlled by the Fed– How the Fed Reserve Bought the Economics Profession

I am left with a number of thoughts after reading this investigative report about the relationship of the Fed Reserve to the field of professional economists (http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278805.html).


-- I was surprised at how few experts in the field of monetary theory there are (some 500 in total). I knew people (like myself) who are not only interested in economics, but in the monetary aspects of economics, are rare, but it was surprising to see how few experts exist.

-- Classic case of the problem of “institutional capture” of academy by big money.

For one, the “establishment institution” dominates employment in the field. Thus, everyone in the field has the natural incentive to conform their work to the interests of the establishment. Even aside from direct hiring, affiliation with and approval by the establishment confers status and opportunity within the field. These factors alone probably take care of 95% of the problem of conformity.

For two, the establishment captures all the gate-keeper positions in the field, thereby controlling hiring and advancement. When the majority of department chairs/journal reviewers are employed by the establishment, is there any question whose interests will be advanced throughout the publishing and hiring process?

-- The end result is a classic example of the problems of intellectual conformity. No one with a heterodox opinion is retained, and so, there is no check on the spread of false doctrine. This allows the establishment to be blindsided by unexpected events (such as the market crash of 2008), and leaves it unable to reform or adjust to new circumstances.

-- The Fed itself is not an “end point” or autonomous institution. The Fed itself suffers from institutional capture by Big Banking. Fed chairmen and governing board members are themselves placed in those positions due to their subservience to global banking interests. Thus, pointing out that establishment economists are beholden to the Fed, is the same as pointing out that they are beholden to the globalist banks.

--True diversity of economic theory has to be sought in the time before the Fed captured the profession, circa the 1970s. By all accounts, prior to that time, there was true diversity of opinion in the field, before everyone became “establishment men” beholden to the power of the Fed over their professional lives.

2 comments:

Adam Michael Luebke said...

I really value your sharp analyses on the Fed and our financial decline. I post your links at my site a lot. Thank you for the great work.

Justin said...

Thanks, Adam, I appreciate your words of support. It is not easy rowing against the stream all alone. A sense of companionship helps immeasurably.