Matt's Talking Loco and I Like It!

Yglesias on the Federal Reserve System:

Given the destructive impact the Dallas, Minneapolis, Richmond, and Kansas City Feds are having on national policy, it’s really time to revisit the absurd governance structure of these entities. The regional Fed presidents exercise important public policy authority, but they’re primarily selected by local for-profit business interests rather than by public officials. It would be as half the Supreme Court justices were selected by corporate law firms dispersed around the country. As long as the Fed seemed to be performing well, I suppose most people took an "if it ain’t broke don’t fix it" line. But the country is mired in tight money, and the regional feds seem to be behind it.

Mark Thoma comments on a Wall Street Journal "symposium" on monetary policy. Long story short: conservative policy makers respond with the usual tripe.

These guys and their type missed the housing bubble and missed the rise of the shadow banking system - the two prime causes of the crisis and slump. Actually not only did they miss the causes, their policy recommendations actively enabled the causes. And not only that, conservatives* tried to block policies like TARP and the stimulus that helped prevent another Great Depression!

As Krugman wrote:

But the story of 1938 also shows how hard it is to apply these insights. Even under F.D.R., there was never the political will to do what was needed to end the Great Depression; its eventual resolution came essentially by accident.

I had hoped that we would do better this time. But it turns out that politicians and economists alike have spent decades unlearning the lessons of the 1930s, and are determined to repeat all the old mistakes. And it’s slightly sickening to realize that the big winners in the midterm elections are likely to be the very people who first got us into this mess, then did everything in their power to block action to get us out.

The governance structure of the Federal Reserve System and the United States Senate need to be revisited.

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* Bush was actually good on immigration, AIDS in Africa, and Islam as a religion of peace. He also appointed okay guys in Bernanke and Paulson who saved our asses. In his memoir Hank Paulson said Congressional Republicans were worthless during the crisis, especially the number two guy in the House, Eric Cantor. From a Newsweek summary:

Meetings with Senate Republicans were "a complete waste of time for us, when time was more precious than anything" (page 275). Ideas that Republicans do add are "unformed," like Virginia Rep. Eric Cantor’s plan to replace TARP with an insurance program. In a rare moment of sarcasm, Paulson goes off on the minority Whip: "I got a better idea. I’m going to go with Eric Cantor’s insurance program. That’s the idea to save the day" (page 285).