Our monetary mavens.

Accordingly, the Fed is pre-occupied with utterly transient and frequently revised-away monthly release data on retail sales, housing starts, auto production, business investment, employment, inflation and the like. But its always about the latest ticks in the data—never about the larger patterns and the deeper longer-term trends.

And of course that’s the essence of the Keynesian affliction. The denizens of the Eccles Building—-overwhelmingly academics and policy apparatchiks—-rarely venture into the blooming, buzzing messiness of the real economic world. They simplistically believe, therefore, that the US economy is just a giant bathtub that must the filled to the brim with “aggregate demand” and all will be well.^[1]

It never ceases to amaze me that people accept that someone like Janet Yellen, or Obama, or Nancy Pelosi can and should make decisions about how to spend their money. Trucking companies know that a new truck might increase their earnings by X amount but the decision that gets made for them is that a solar panel manufacturer should instead get their money or that a bridge over a hiking trail in Yosemite should be repaired.

I only play an economist in the movies but you can’t beat this definition of Keynesian economics: The belief that you can raise the level of water in a swimming pool by taking water out of one end of the pool and dumping it in the other.

The word "maven" in the title of this post is carefully chosen. One definition of maven is your pal who goes to the stereo store to advise you on what stereo to buy. Your friend knows he doesn’t know anything about stereos and the salesman also knows that your "expert" knows nothing. The only person who doesn’t know that your maven is clueless is you.

Keep this in mind next time you contemplate that "12 members of the FOMC can tweak the performance of a $17 trillion economy on virtually a month to month basis—using the crude tools of interest rate pegging and word cloud emissions (i.e. ‘verbal guidance’)."^[2]

Notes
^[1]  "The Fed’s Credit Channel Is Broken And Its Bathtub Economics Has Failed." By David Stockman, Contra Corner, 9/28/14.
^[2]  Id.