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In respect of the latest publication of the transcripts of the Federal Reserve, let us just say that we’re against it. The transcripts were disclosed the other day, five years after they were made. This seems to be the tradition at the Fed. It’s a tradition this newspaper opposes. What we support is the silence of the Fed. We objected when Chairman Bernanke announced he would start holding quarterly press conferences. It’s bad enough he has to testify before Congress. It’s bad enough he made five minutes of remarks when he was sworn in. It’s bad enough we live in an age of fiat money. We already have the minutes of the Fed meetings. Why in the world do we need the actual transcripts of the governors issuing their scrip?
And what is the logic of the five-year delay? Why not make it three years? Or five decades? Or — our preference — five centuries? The truth is that the length of the delay is arbitrary. It’s not connected to anything of substance. Call it a “fiat delay.” The five years is just made up out of whole cloth. If it were important to have an exact transcript of what was said at these infernal meetings, there would be no logic to a delay. The logic would be to publish the transcripts, if they must be published, as soon as the ink is dry, or even while it’s still wet. Or to open the meetings altogether and allow the press to sit at the side of the room.What’s apparent is that the cataract of words from the Fed is a feature of fiat money. The Federal Reserve needs to maintain the illusion that what the governors say is important enough to keep secret and meaningful enough that one should read the transcripts even five years after they were uttered. Ergo, the scrip — the irredeemable electronic paper ticket money, as the Foundation for the Advancement of Monetary Education calls it — the Fed is issuing must have some value. This illusion, however, has lately been shattered by the collapse of the United States dollar to below a 1,600th of an ounce of gold.
Given this collapse, do we really need to know that in the fall of 2006, the president of the San Francisco Fed, Janet Yellen, who we don’t doubt is a fine person, told her colleagues that the “deceleration in house prices continue[s] to surprise us” and that she’d spoken with a builder who’d toured some subdivisions near Boise where unoccupied houses were “being dressed up to look occupied — with curtains, things in the driveway, and so forth — so as not to discourage potential buyers.” Do we need to know that in the entire 106 pages of the transcript of the first meeting of 2006, the governors of the Fed failed even once to mention the word “gold.”
It’s worse than that. The staff of The New York Sun’s Department of Document Inspections came in over the weekend and ran the entire year’s worth of transcripts of the Federal Open Market Committee through a 2-core Intel-powered computer operating at 2.13 gigahertz, with a scanner with a full-color, gray-scale visual digital display readout. It discovered that in the hundreds of pages of discussion of monetary policy, covering the entire year of 2006, the governors of the Fed mentioned the word “gold” only three times and the word “silver” only once. It turns out that as far as the Federal Reserve goes, the entire periodic table might as well not exist.
And that’s not all. In an entire year of meetings, filling hundreds of pages of just-released transcripts, the members of the Federal Open Market Committee referred only once to the United States Constitution. The one reference to our founding parchment, which gives the Congress the power to coin money and regulate its value, was made by the president of the Federal Reserve Bank of Richmond, Jeffrey Lacker, who, in a discussion of future inflation, asserted that “as a matter of public accountability in a constitutional democracy, we owe it to the citizens of the United States to tell them this simple and yet very important implication of how we conduct monetary policy, if only to make the use of retirement-planning software easier.” The transcript then contains this notation: “[Laughter].”
* * *
The Fed is starting to remind people of Woodrow Wilson’s son-in-law, William Gibbs McAdoo. We had a note about McAdoo over the weekend from James Grant, editor of the Interest Rate Observer. It seems that McAdoo, during his campaign for the Democratic presidential nomination in 1924, kept putting his foot in his mouth. “What your friends want out of you is silence,” one of McAdoo’s supporters supposedly told him, “— and damn little of that.” Our sentiments exactly. The Federal Reserve, not to mention the rest of us, would be better off without the all the words that pour from its transcripts, press conferences, and minutes. After the release of the transcripts this week, the New York Times quoted one professor, Justin Wolfers of the Unviersity of Pennsylvania, as saying the latest disclosures were embarrassing not only for the Fed but for all of economics. In any event, the Fed’s words are a poor excuse for money. We say: Let the Fed stand mute. For however much time we still have a Fed, let us discover its policies the way we discover the properties of a black hole, not by the light that comes out — none does — but by the behavior of nearby objects. It would be more credible for the Fed and more efficient for the market, until the day comes when we can get back to constitutional money defined as a given number of grains of specie.
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