The Federal Reserve Goes Woke
Imagine "go woke go broke," but it applies to a hegemonic power rather than the Grammys
Navigate to newyorkfed.org, and rather than anything relating to monetary policy, you will be met with the following impenetrable statement front-and-center on the landing page:
In the turgid tradition of Fedspeak, this word salad simultaneously means nothing — purposely crafted to be a series of vague platitudes — while also signaling their true intentions: a deep and unwavering institutional commitment to Critical Race Theory (CRT), wokeness, and equity. It is especially nefarious because, much like criticizing “anti-fa” ostensibly makes one “fa,” it holds by construction that criticizing “systemic racism,” makes one racist, misogynist, bigoted, whatever. These are all basically variants of the same word: heretic! So be it — I for one am happily heretical to the modern secular religion of militant blank slate egalitarianism that denies and inverts reality.
I mean no personal offense to whatever HR shrew vomited out this paragraph — you are simply too low IQ, too brainwashed, and too lacking in the ability for second-order thought to be held responsible for your own actions. I share your empathy for the downtrodden members of our society, and I am sure that you had nothing but the best intentions. But, unfortunately, you have failed to consider the legion of disincentives and unintended consequences which will — just as they have a hundred times before — end up hurting the marginalized people you so desperately yearn to help.
How so? What could possibly be bad about this quixotic quest for equity, you ask? At best, it is poorly defined, and at worst it is incoherent and/or malevolent... I would even go so far as to posit that it belies communist sympathies, as a focus on “equality of outcome” as opposed to “equality of opportunity” so often does. Now, it is easy to derisively laugh at this communism dig, but harping against dirty commies here is only a tiny bit of a stretch: the Black Lives Matter co-founder describes herself as a ‘trained Marxist’, and I would challenge you to find me a heavily online tankie who opposes CRT and compelled diversity statements… go on… I’ll wait.
This then begs the question: what happens when such crypto-communism is allowed to creep into our once hallowed institutions? What happens when Marxists become our central bankers? The financial system loses all credibility and crumbles, of course. Trust and independence must be earned by meritocracy, competence, and institutional restraint; they are pissing it away for nothing, save for some warm fuzzy feelings. Stuff like this has absolutely destroyed the credibility of other countries many times over, and if the U.S. stays on this path, I am not sure how the IMF can credibly advocate for monetary independence overseas. You tell them to stop giving political handouts to political clientele, they'll just point to America and say you're doing exactly the same thing. The end game here is that USD will fall, the empire implodes, and Chicago becomes Chengdu. China is laughing at you.
Central banks should be boring, conservatize, predictable, and cautious — not on the cutting edge of whatever the political cause-du-jour is. By extending their dual mandate of stable prices and maximum employment to a triple mandate (“no more white males!”), the Fed has made the fatal mistake of falling for mission creep: the gradual or incremental expansion of an intervention, project or mission, beyond its original scope, focus or goals. The Fed is simply not empowered, nor competent, as a general purpose do-good agency... and even if they were, this expanded mandate would need to be legislated and codified, not handed down from on high by rent-seeking administrators and Machiavellian midwits. Even if it were given a thin patina of legitimacy by being codified by lawmakers, the idea that “racism” can be "fixed" by academic economists choosing racism towards whites is bubkis.
Why have we allowed this mission creep to occur? The most obvious, and mostly correct answer, is that — fueled by a Democratic Whitehouse and vindictive anti-Trump backlash — the political zeitgeist demands it. An even simpler explanation might be that Central bankers have big egos and like to feel important; interest rates have been stuck at zero for the past decade, they are sitting in their cubicles with their thumbs up their collective asses, and so they sought out new powers out of some misguided notion of needing to feel useful. They should be focusing on providing liquidity — full stop — but that doesn’t get you invited to Davos these days.
This sanctimonious busybodiness would be tolerable if it were still confined to useless humanities departments: as Henry Kissinger quipped, 'The reason that university politics is so vicious is because stakes are so small.' But it is disastrous at the gargantuan scale of the Federal Reserve — they printed a record 4 trillion dollars in 2020, and I think it’s a non-zero possibility that we are about to experience hyperinflation just because Joe Biden and Janet Yellen have polling numbers to maintain.
So you see, this prose goes well beyond flowery rhetoric — they sincerely mean it, and are more than willing to take action in order to change the composition (i.e. stock) of the Federal Reserve. How do you change a stock? Simple: by altering the flow. Therefore, they have weaponized an all-too-willing nebulous bureaucracy of barely literate careerist grifters to aggressively implement affirmative action. Interestingly, a few years ago, the party line was to deny the existence of such affirmative action initiatives altogether — you were gaslit as a crazy conspiracy theorist if you so much as suspected it was taking place. But in a post-Covid world, any such pretense of meritocracy has gone out the window, and not even the most ardent wokie still denies with a straight face that massive affirmative action is happening. It is an accepted fact of life, and whether it takes place out in the open (as when McMaster University posted an ad for “Black Faculty Cohort Hire” this year), or in the shadows (as is the case when deans/managers conveniently only have the budget for a new hire if they tick the right boxes), is irrelevant. To produce the desired outcomes regardless of the inputs, they have lowered standards and changed the criteria for hiring from objective criteria (math, coding, etc.) to subjective criteria. The focus is now on "job skills" like "collaboration and teamwork.” This is what a former Section Chief at the Federal Reserve Board of Governors had to say on the matter:
Dr. Sahm’s conclusion here is batshit insane — that diverse economists would somehow magically be able to forecast macroeconomic futures better than white male economists. Of course there is no proof whatsoever to support this; it is simply vapid, self-righteous, self-congratulatory handwaving. But sadly, I think she really believes her own drivel — I would love the smell of my own farts, too, if I had a Wikipedia page longer than that of Emmanuel Farhi, Larry Katz, and James M. Poterba. I guess all it takes to earn a Wikipedia page these days is to name a banal, trivial, and wholly unimportant rule after yourself and then browbeat anyone who doesn’t performatively say “Yaas queen.” I have literally no idea why the Sahm Rule is a novel insight that needs its own name; it dictates that when the unemployment rate rises, there will be a recession... but recessions are defined in part by movements in the unemployment rate! Not to mention that she totally stole it from former New York Fed President Bill Dudley, who came up with it 10+ years before her.
In a recent blog, Economist Arnold Kling talks about what drives this new generation of economists like Dr. Sahm to act in the way they do.
The older culture saw differential rewards as just when based on performance. The newer culture sees differential rewards as unjust.
The older culture sought people who demonstrate the most competence. The newer culture seeks to nurture those who are at a disadvantage.
The older culture admires those who seek to stand out. The newer culture disdains such people.
The older culture uses proportional punishment that is predictable based on known rules. The newer culture suddenly turns against a target and permanently banishes the alleged violator, based on the latest moral fashions.
The older culture valued open debate. The newer culture seeks to curtail speech it regards as dangerous.
The older culture saw liberty as essential to a good society. The newer culture sees conformity as essential to a good society.
The older culture was oriented toward achievement. The newer culture is oriented toward safety. Hence, we cannot complete major construction projects, like bridges, as efficiently as we used to.
To enforce this handoff of power from the old guard to the new red guard, and to silence anyone who dare question them, left-wing zealots have been able to marshal the social, cultural, financial, psychological, and political force of society with a religious fervor usually reserved for waging jihad. An Economics professor at Texas A&M recently compared this to McCarthyism:
This chill, fratty, cyberpunk McCarthyism she mentions is very real — and tons of people actually do get cancelled in real life as a result. For the perfect example, look no further than University of Chicago professor Harald Uhlig, who was dragged through the mud by major news outlets (see this fakenews hit-piece by the NYT), fell under international condemnation by Nobel Prize winner Paul Krugman and Treasury Secretary Janet Yellen, and was the target of a deeply dishonest petition circulated and signed by 500 other “economists.” Most relevant to this blogpost, however, is the fact that the Chicago Fed terminated Mr. Uhlig’s contract because “his views are not compatible with these values and our commitment to diversity, equity and inclusion.” What was his crime? It was this milqueotoast tweet:
To be fair, it was a whole thread — not just a single tweet — and it was combined with the fact that someone dug up an old blog entry where he says that the national anthem is not the time and place to kneel. A good synopsis of the whole incident is written in a blogpost titled “The Cancel Culture Mob Comes to Economics.” But still, holy shit… are the views (or even the tone) here so beyond the pale that he must be instantly outcast from the profession? What message does it send to the profession? Who will dare question radical ideas?
While Uhlig personifies the “stick” of the cancel culture mob, on the other end of the spectrum is Lisa Cook, who personifies the “carrot” — she has been handsomely rewarded by the powers-that-be for carrying their water. So, who is Lisa Cook? Just a random economist at Michigan State University who has shamelessly leveraged her skin color and genitalia into gaining the backing of several key White House officials as the probable choice for President Joe Biden’s next nominee for an open seat on the Federal Reserve Board of Governors.
Just how unqualified is she? Glad you asked. Please go look at her CV yourself, which shows that based on merit she's not even qualified to be a visiting staff economist at the Fed, let alone serve on the Board of Governors. In fact her publication record in econ/finance journals is clearly insufficient for tenure — much less full professor — at MSU (rank ~30). If she were an Asian male economist, she would be laughed out of any school in the top 200. She’s not even a macroeconomist! This isn’t her area! The Hill glowingly reports that "Cook’s academic writing suggests she is a dove, meaning she’s less concerned about inflation and more focused on improving labor market conditions." But which one of her papers has anything remotely suggesting that? Bueller…? Bueller…?
She also constantly lies and schemes, and is widely known as a bully. Her most blatant lie is a claim on her website to have published a peer-reviewed article in the American Economic Review (the top Economics journal in the world!), despite just… not having done that. Her google scholar page inflates her citation count by hundreds due to a fortunate “mixup” in her favor. She hides from her CV that she got her PhD in 1997 because she is such a lemon that 23 years out of her PhD, she has a couple half-assed publications to show for it. In a recent NYT interview, she made up statistics to support her claim that “There is a growing body of evidence to suggest that underrepresented minorities and women are under-cited." When pressed about it last year, she admitted that there was no evidence whatsoever, only a report that she helped write. Clearly she feels we are allowed to make up evidence if it's for the "social good."
She is a fraud and an intellectual lightweight, yet no one is brave enough to point it out for fear of retaliation. If you think she doesn't have the power on social media to ruin your reputation and career, you are delusional. She has correctly and shrewdly calculated that no senior person in the economics profession is willing to levy the political capital necessary to say this publicly. Unfortunately for her, I am a junior member of the profession, so I am allowed to punch up.
Despite all this, she constantly publicly asserts that the “system is broken,” while being a living, breathing, monument to just how egregiously the system is broken in the other direction. I hope Black female scholars and aspiring economists around the world keep fighting the good fight for equality, but please, I implore you: do not follow in her steps, or nobody will respect you. She is a grifter.
This brings me to the conclusion of my second ever Substack post. In my first post, I ended with pragmatic advice: how to gamble on a particular financial instrument. Following that theme, I will also end with pragmatic advice here — this time directed at US Senators rather than at degenerate gamblers: please do not elect Lisa Cook to the Federal Reserve Board of Governors. The future of civilization may depend on it. Should she be nominated and passed, the damage that she will do will last for decades; she will use her promotion to push for more change and a downgrading of standards, and she will do it with a smile on her face as she pats herself on the back. She has dangerously insane ideas (e.g. requiring racial quotas for boards of publicly traded companies) and fascistic sympathies — you can be sure that she will fight for expanded powers for the government to tell large corporations who to hire, who to fire, what to make, what to buy, what to invest, how much to charge. Just as most Berkeley PhDs do, she thinks she knows what is best for you, and she will do everything in her power to compel businesses’ political support. That sounds like fascism to me.
very spicy post, like a good vindaloo chased down with one's preferred beer
I'm glad society is swinging back to sanity being favoured over the insanity of the last 4/5 years. Public disorder and "everybody's a racist(tm)" isn't making North America a better place.