Facts about the Fed: An Inside Look

There is an excellent way to cut through the misleading commentary about the Fed.  You will learn a number of useful facts, and feel less nervous about what Fed Governors say.  Not only that, it is an enjoyable way to spend a couple of hours.

Read Laurence Meyers book, A Term at the Fed.  You can take it to the beach or read it on the plane.  As I was reading it, my wife kept asking me what was so funny, so I guess it also has some humor.  At least some of the prof-style laughs….

Here are a few of the things you will learn:

  • The importance of staff.  These are not a bunch of research assistants.  They are talented and able economists who have a significant impact on thinking and policy of the governors.
  • How consensus is achieved.  It does not all happen at the meetings.
  • The Fed has twin goals.  It is not just about price stability.  The economy matters.
  • Inflation targeting has opposition, including Donald Kohn, who had several important staff roles before his appointment as a Governor.

There is also a lot of color about speeches by Governors – -what they say and the possible limits on them.  This is good to know.  There is independence of thought and action, but also a sense of responsibility.

This is a good read. It is a book that will make you a better investor in the current trading environment of "All Fed, All the Time."

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