Up to now, a wokeness obsession seemed more of a secondary issue at the Federal Reserve, whose money-printing policies have vastly contributed to the current inflation spike. Former Treasury Secretary Larry Summers warns, however, that the central bankers don’t have their eyes on the ball these days. They’re more worried about social-media plaudits over wokeness than in regulating the money flow, and perhaps even openly hostile to the economic system they’re helping to regulate:
Former Treasury Secretary Larry Summers on Wednesday excoriated Federal Reserve policymakers for paying too much attention to social issues rather than a pandemic-induced inflation surge that’s triggered wild increases in many consumer prices.
“We have a generation of central bankers who are defining themselves by their ‘wokeness,’” Summers said Wednesday while speaking to a virtual conference organized by the Institute of International Finance. “They’re defining themselves by how socially concerned they are.” …
“We’re in more danger than we’ve been during my career of losing control of inflation in the U.S.,” Summers, a Harvard University professor, said. “We’ve gone even further towards losing it in Britain and I think we’re at some risk in Europe.”
That’s a damning indictment, especially coming from a former official from Democratic administrations. “When you lose Larry Summers … ” Joe Kernan lamented on CNBC:
It’s not just a casual observation, either. The Wall Street Journal reported over a week ago on a remarkable statement from a Fed economist named Jeremy Rudd, who postulated that inflation is driven at least in part by the perception of inflation. That’s an arguable position — probably true to some extent in futures-driven markets like energy — but that wasn’t the most problematic declaration in Rudd’s analysis of inflation:
The truly remarkable message arrives in a footnote that appears right after the passage quoted above. The footnote reads:
I leave aside the deeper concern that the primary role of mainstream economics in our society is to provide an apologetics for a criminally oppressive, unsustainable, and unjust social order.
At a threshold level, is this really economics research or do we have here another case of a Fed official using the institution to advance a political agenda?
Of course the message in this Fed paper also raises a much more significant question: Are we entrusting the preservation of our currency—a bedrock of our society—to people who don’t want to preserve our society?
The WSJ’s James Freeman asked Rudd, and then the Fed’s PIO, for an explanation of this strange statement. No one seemed too eager to offer one, except for a reference to the disclaimer on the Fed’s website about the paper representing only the view of its author. ‘The economic research and their conclusions are often preliminary and are circulated to stimulate discussion and critical comment,” the disclaimer concludes, but now it appears that the Fed doesn’t want “discussion” about Rudd’s views on the current “criminally oppressive, unsustainable, and unjust social order.”
Does anyone at the Fed find it objectionable, or at least worthy of an explanation, when a paper about the economy refers to “a criminally oppressive, unsustainable, and unjust social order”? … Will it not explain what appears to be a shameful swipe at the country it is supposed to serve?
Hence Summers’ gloomy assessment of the Fed’s value in containing inflation. If Rudd represents the state of the Fed at the moment, and the Fed refuses to clarify that point, then how invested are they in keeping this economy from crashing around us? It’s not just that they’ve taken their eyes off the ball, but that at the moment, the Fed appears to be playing a much different game than we expect. Until the Fed starts to have that “discussion” about Rudd’s view, Summers’ question is well worth asking.