Secrets Of The Fed

In respect of the latest publication of the transcripts of the Federal Reserve, let us just say that we’re against it. The transcripts were disclosed the other day, five years after they were made. This seems to be the tradition at the Fed. It’s a tradition this newspaper opposes. What we support is the silence of the Fed. We objected when Chairman Bernanke announced he would start holding quarterly press conferences. It’s bad enough he has to testify before Congress. It’s bad enough he made five minutes of remarks when he was sworn in. It’s bad enough we live in an age of fiat money. We already have the minutes of the Fed meetings. Why in the world do we need the actual transcripts of the governors issuing their scrip?

And what is the logic of the five-year delay? Why not make it three years? Or five decades? Or — our preference — five centuries? The truth is that the length of the delay is arbitrary. It’s not connected to anything of substance. Call it a “fiat delay.” The five years is just made up out of whole cloth. If it were important to have an exact transcript of what was said at these infernal meetings, there would be no logic to a delay. The logic would be to publish the transcripts, if they must be published, as soon as the ink is dry, or even while it’s still wet. Or to open the meetings altogether and allow the press to sit at the side of the room.

What’s apparent is that the cataract of words from the Fed is a feature of fiat money. The Federal Reserve needs to maintain the illusion that what the governors say is important enough to keep secret and meaningful enough that one should read the transcripts even five years after they were uttered. Ergo, the scrip — the irredeemable electronic paper ticket money, as the Foundation for the Advancement of Monetary Education calls it — the Fed is issuing must have some value. This illusion, however, has lately been shattered by the collapse of the United States dollar to below a 1,600^th of an ounce of gold.

Given this collapse, do we really need to know that in the fall of 2006, the president of the San Francisco Fed, Janet Yellen, who we don’t doubt is a fine person, told her colleagues that the “deceleration in house prices continue to surprise us” and that she’d spoken with a builder who’d toured some subdivisions near Boise where unoccupied houses were “being dressed up to look occupied — with curtains, things in the driveway, and so forth — so as not to discourage potential buyers.” Do we need to know that in the entire 106 pages of the transcript of the first meeting of 2006, the governors of the Fed failed even once to mention the word “gold.”

It’s worse than that. The staff of The New York Sun’s Department of Document Inspections came in over the weekend and ran the entire year’s worth of transcripts of the Federal Open Market Committee through a 2-core Intel-powered computer operating at 2.13 gigahertz, with a scanner with a full-color, gray-scale visual digital display readout. It discovered that in the hundreds of pages of discussion of monetary policy, covering the entire year of 2006, the governors of the Fed mentioned the word gold only three times and the word silver only once. It turns out that as far as the Federal Reserve goes, the entire periodic table might as well not exist.

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