EconomicsUSA: Federal Reserve Bank: Gives invesstment tips to select investment groups

-
-
-
Securities Law Prof Blog (November 23, 2k11)
-
-

Should the Fed Be Talking to Investors Behind Closed Doors?

There has been much discussion the last few weeks about whether Congress-people and their staff have profited by trading on confidential information acquired through their positions.  Today the Wall St. Journal reports on other privileged investors that may have access to confidential information.  According to the WSJ, certain investors and analysts meet frequently with top Fed Reserve officials, who may provide them with clues about its policy changes.  It gives an an example an August 15 meeting between Ben Bernanke and Nancy Lazar, an economist with International Strategy & Investment Group, after which Lazar, according to the Journal, called clients and told them the Fed was about to implement a strategy that would boost long-term bonds.

Of course, meetings between regulators and industry representatives are not by themselves nefarious.  It makes sense that the Fed wants to hear from those affected about the impact of its policies.  Nonetheless, close contacts between regulators and industry it regulates are troublesome, particularly if the industry may derive more value from these meetings than the regulators do.

WSJ, Investors Bullish on Fed Tips

EconomicsUSA: Central Bank: Federal Reserve defends against Congressman Paul

Robert Wenzel, editor, EconomicPolicyJournal.com 

Mr Wenzel writes here with much disdain, but stick with him as he makes his case contra the Fed and for Congressman Ron Paul's hearings in Congress to examine the Fed.

-- EconoMix

Is This the Best the Fed Can Do in Its Defense?

The Federal Reserve Bank, no doubt at the suggestion of one of 
the high priced PR agents they maintain, has fired a shot at Ron Paul 
in his own backyard.

The Houston Chronicle carries an op-ed by Paul Hobby, who is 
chairman of the Houston branch of the Dallas Fed.

Let's take a look at this commentary that is boldly titled, "Hands off 
the Fed"

Hobby makes clear right at the start this is about Ron Paul:

Defense of our central bank is imperative just now because the House Financial Services Subcommittee, which provides congressional oversight of the Federal Reserve System, has a new chair — U.S. Rep. Ron Paul, R-Lake Jackson [TX]. Paul is a frequent critic who has published a book titled End the Fed. Almost certainly, Paul will seek to make a fundamental inquiry into whether the United States will retain the ability to conduct monetary policy at all.

Then [Hobby] says:

No one who studies the global economic issues today would forfeit this nation's ability to conduct monetary policy through a central bank.

This statement is simply factually wrong. Congressman Paul has certainly 
studied the issues and has not reached that conclusion, as have many 
economists, mostly from the Austrian school of economics.

I'm hoping Hobby isn't trying to be serious when he writes:

Part of the problem in this public debate is that few of us have much personal experience with, or perspective on, monetary policy. It is simply not a visible part of most people's daily lives

The problem is that most Americans have too much experience with the 
Federal Reserve through Federal Reserve notes that buy less and less food, clothing and gasoline every year.  Read more ...