No, what is dangerous is trotting out former Fed governors to scare the Munchkins, keep people off the yellow brick road and attempt to quash all questioning of the all powerful wizards. We will just click our heels and it will all work out... 'there's no place like home'.
This is America Mr. Mishkin. It is not Oz and it is not a place where the people have no right to know. America's government - whose Congress works closely with your former institution in financing all manner of debt fueled enterprise - is of the people. And through Dr. Paul's bill, all the people would ask is to know, well after the fact, what the Fed is doing.
"The Ron Paul bill is incredibly dangerous," said Mishkin, who is now a Columbia University professor, in a Bloomberg Radio interview. "It is remarkable the kind of attacks that are occurring on Fed independence."
Asking for limited transparency is an attack?
Paul's bill "would be very dangerous in terms of promoting inflation," Mishkin said. "If you make the central bank beholden to politicians on a short-run basis, you get very bad outcomes: high inflation and less of the ability to deal with shocks like the ones we had recently."
That's funny Frederic, I always thought inflation was what you guys do every time the system hiccups, when new debt is issued and Federal Reserve Notes are printed out of nowhere.
"A number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions," he wrote. The measures "would seriously impair the prospects for economic and financial stability in the U.S."
If the 'stability' exhibited in Q4 2008, which directly resulted from years of the Greenspan Fed's policy will be seriously impaired, then let's hear it for impairment.
"This is not the way to do monetary policy," he said. "There are a whole bunch of proposals about regulatory authority and the Federal Reserve, which are potentially extremely damaging to the economy."
Okay then, how exactly do we do monetary policy Mr. Mishkin? You would have to be a myopic bureaucrat or an academic to believe that the economy is not already damaged beyond repair and has been for many years. Yet the wizards continue to repair it, cycle after cycle with more of what killed it in the first place, debt. In short, it is an ongoing Ponzi scheme with an as yet undetermined time frame on final resolution.
"You have to make sure you are not fighting the last war," he said. "In the U.S. context, there have been people talking about bubbles in the United States and saying this is a big problem and the Federal Reserve needs to exit from its expansionary monetary policy in order to deal with them. This is fighting the last war."
We are not in Oz. We are in Wonderland, down the rabbit hole. You created the last war and now you are not willing to fight it. You would create new wars for our kids to fight. Do you have children Frederic? What about grandchildren?
Mishkin called surging gold a "sideshow" and said prices of the metal "move all over the map for many, many different reasons and have very little impact on the economy."
"If gold price movements are reflecting other factors that could be important, you might worry," he said. "For example, if gold is going up because people are worried the Federal Reserve won't be able to contain inflation, that is serious."
You are hopeless sir. But you have the pulpit known as Bloomberg and other major media outlets with which to influence a few Munchkins. Keep 'em off the yellow brick road at all costs because you know what is good for them. But it seems more and more each day are realizing that 'hey, maybe I'd better take matters into my own hands... this Fed policy (with my Government's money) is crazy!'
There is little doubt that there will be $100 down days in gold ahead, but on the big picture the price of this monetary anchor will continue to seek out a level of value that is in direct opposition to the level of confidence in the system that the Fed manages so well.