This is going to be a Fed column. But it’s also about being fed up, and how the most shocking result of the current national annoyance at Washington’s policies might not be seen just in the upcoming presidential election.
Americans are so disenchanted that it’s possible Donald Trump could be our next president. And we also know that a formerly little-known Democratic socialist named Bernie Sanders is giving a very-well known Hillary Clinton an exhausting fight to become the other candidate for the White House.
It was really the Federal Reserve that dictated the nature of this race. Neither Trump nor Sanders would be where they are today if it weren’t for three stooges — Alan Greenspan, Ben Bernanke and Janet Yellen.
Greenspan’s Fed is largely responsible for the Great Recession by having broken the long-standing rules about keeping interest rates too low for too long. He’d blame the politicians of the Bill Clinton and George W. Bush administrations for egging him on, but he didn’t have to be a stooge.
At Bill Clinton’s second inauguration in January 1997, Greenspan sat proudly beside Hillary Clinton during the ceremony like a political puppet.
During the Bush administration, the Fed probably thought it was doing the country a big favor by keeping borrowing costs at rock bottom to prevent people from cutting back spending after the 9/11 terror attack and the resultant wars in the Middle East.
Then came the collapse of all those cheap-money loans that people, it turned out, couldn’t afford. Next came the Great Recession of 2007 to 2009 and the near-collapse of the nation’s banking system.
It didn’t help that Bush administration officials and members of Congress were acting like frightened little kids when they went on national TV as often as they could and stoked fear. Maybe the sky was falling, but that didn’t need to be advertised so well.
So the Fed pushed interest rates even lower. And then came the very iffy proposition to have the US government — through the Fed — buy massive amounts of bonds being sold by the US government.
Despite the fancy name, so-called quantitative easing was nothing more than a bunch of government shill buyers rigging government bond auctions by bidding on their own debt.
Except that it didn’t help the economy grow much. The US has had the slowest growth in recent memory, probably because those low rates have made it impossible for the average American to use the income from his or her savings to buy things.
Why bring this up now? Because there’s a bill, HR 24, going through the House of Representatives that could make the Fed accountable for its actions.
Efforts to peek behind the Fed’s obtuse language have failed before. But the current legislation, called the Federal Reserve Transparency Act, was being “marked up” in the House a few weeks ago, one of the first steps in getting a vote on the measure.
It’ll be a long time before the Fed has to worry that its secrets will be revealed. But it does have to worry.
The Fed recently hinted strongly that interest rates might rise again in June. It would be good to know why — with the economy still limping along — this sudden decision was made.
If that bill or any future one ever forces the Fed to release a transcript of its meetings — with a full range of diverse opinions and devious suggestions — that will be something to read.
So two things are going on right now: 1) Voters are scaring the bejesus out of the political establishment, and 2) Congress has Fed Chairwoman Yellen on an electrified high wire.
And it all started long ago at the Fed.
