Bundesbankification

[unhappycamper]

http://www.prudentbear.com/2014/02/bundesbankification.html#.UxPrCyh8vzI

Bundesbankification
February 28, 2014 posted by Doug Noland

~snip~

For someone deeply engaged in monetary theory and policy, Thursday was special. While CNBC was carrying Janet Yellen’s testimony before the Senate Banking Committee, there was also a live feed available for a panel discussion on monetary policy at the Bundesbank Symposium on Financial Stability. The two discussions were separated by much more than the Atlantic.

The Bundesbank discussion panel included Federal Reserve of Dallas President Richard Fisher. And with Yellen in a dovish mood as she interacted with the Senators, I listened attentively for any subtle change in tone from the hawkish Dallas Fed head. Mr. Fisher did not disappoint. In an interesting testament to the tectonic shift unfolding in the U.S. monetary policy debate, Fisher went so far as to refer to the Dallas Fed as the “Bundesbank of the United States.” Moreover, he added the comment “we agree on almost everything” as he turned the forum over to the next panelist, Otmar Issing.

It is music to my ears to hear a top Federal Reserve official use the (catchy) word “Bundesbankification” and proudly state his agreement with prior Bundesbank Chief Economist Otmar Issing. It’s been a long wait! Over the years, I’ve chronicled the clash between the (“Austrian”) framework underpinning doctrine at the Bundesbank and an altogether different view of how economies and finance function from the Federal Reserve. I’ve always viewed Otmar Issing as a brilliant thinker and one of the great contemporary experts on monetary policy doctrine. One of my attempts to highlight the opposing economic doctrines dates back to an early-2004 CBB – “Issing v. Greenspan.”

I did my best to transcribe Dr. Issing’s astute comments below. He politely addressed his contrasting views over the years with those of the Fed, mentioning the “Greenspan put,” moral hazard, asymmetrical policymaking and the “risk management” approach adopted by the Greenspan and Bernanke Federal Reserves. I’ll go a step further than Fisher in agreeing with EVERYTHING Issing said.

[Democracyinkind]

1. This is one of the most important things I've ever read on DU! Thanks.

To good to be true?