Insta-Millard: Greenspan explains why and how Fed is accountable

April 30, 2014

A group of people, including a lot of the acolytes of Ron Paul, claim the Federal Reserve Bank system is a renegade organization, unaccountable to anyone.

Alan Greenspan, by the late, very great David Levine

Alan Greenspan, by the late, very great David Levine

Turns out that Ron Paul actually had the guts to ask Fed Chair Alan Greenspan about that.  Greenspan’s answer is worth watching, and hearing.

It was on CSPAN-2, so you probably didn’t see it.  Not the sort of thing Fox likes to run over, and over, and over again, to distraction.

Still looking for  video of Greenspan explaining the annual Fed audits that Ron Paul claims don’t exist . . .

 


Historian David McCullough: What is the value of education?

April 17, 2014

Historian David McCullough works on his vintage, historic Royal typewriter. Photo by Dorie McCullough Lawson. via Levenger Press.

Historian David McCullough works on his vintage, historic Royal typewriter. Photo by Dorie McCullough Lawson. via Levenger Press.

Branch banks of the Federal Reserve work hard to provide economic education; alas, in the era of state standards requiring “teach to the test,” a lot of this stuff goes unused.

What is the value of education?  The Dallas Branch of the Fed had historian David McCullough in for consultations; they asked him on video, and here’s his response.

“We must be an educated people. We cannot be a productive, original, innovative society if we aren’t educated.”

For more information, visit the Dallas Fed’s website.

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No, the Fed has NOT discouraged saving

February 19, 2014

Fed can’t explain it, but, no, low interest rates appear not to have discouraged savings.  Tea Party catastrophe mongers won’t change their claims, though, I’ll bet.

Do they even look at the facts?

Also:  No, the Fed is not “flooding the nation with increased money supply.”

According to Rex Nutting at MarketWatch:

According to Rex Nutting at MarketWatch: “The Fed is not flooding the economy with money. The growth of the money supply has actually slowed since the adoption of QE3. Yes, the Fed has conjured about $1 trillion in the past year to buy super-safe Treasury and mortgage-backed bonds from the private sector in a bid to force investors to put their money into riskier investments that will help the economy grow a bit faster.

Nutting’s column at MarketWatch is worth the read just for the links he provides to documents that explain what the Fed does and how the economy works — documents that appear beyond the reading and perhaps beyond the ken of far too many critics of the Fed and actions we need to take to get to robust economy.

(Why, yes, Nutting is a veteran of the Daily Utah Chronicle and Utah’s journalism program.  Why do you ask?)


Immigration policy: Surprise answers from the Dallas Branch, Federal Reserve

August 30, 2013

Did you miss this interview last spring?

Pia Orrenius knows more about the economic effects of immigration on the modern U.S. than almost any other person alive — her job is to study immigration economics for the Dallas Branch of the Federal Reserve Bank.  As a dull economics researcher, she can be quite lively — in a bank of economics presentations, Orrenius will deliver the goods and keep you wide awake.  To deserved astonishment, Orrenius’s work is occasionally published by the right-wing generally isolationist American Enterprise Institute.

Pia Orrenius, Dallas Federal Reserve economist, Photo by David Woo, Dallas Morning News

Caption from the Dallas Morning News: Dallas Federal Reserve economist Pia Orrenius co-wrote a book on immigration reform with economist Madeline Zavodny. (Photo by David Woo/DMN)

Last spring the Dallas Morning News interviewed Dr. Orrenius, with a short version published in the Sunday “Viewpoints” section.  You could learn a lot from her.  In its entirety, for study purposes, the interview  from June 21, 2013 (links added):

Prepare to have your preconceived notions about immigration challenged. Pia Orrenius, 45, was born in Sweden and raised and educated in the U.S. She is a labor economist with the Dallas Federal Reserve Bank who has been studying the impact of immigration for two decades. Orrenius sees immigration through the prism of research, resulting in views that buck much of today’s accepted political dogma. She supports relaxing immigration restrictions for high-skilled workers and extending portable work visas to low-skilled workers, and warns of the unintended consequences of increased border enforcement.

It seems when we talk about immigration from a political perspective, much of the focus is on border enforcement. How important is border enforcement?

In terms of the immigration debate, border enforcement — while it’s very necessary and an important component of immigration policy and national security policy and defense policy — has unintended consequences. I know some people like to argue that border enforcement is not effective. It is, actually, effective. It’s just that you need a lot of it for it to be effective. And it’s very expensive. So you put all this costly border enforcement in place, and what happens? Fewer people get in. When fewer people get in, the wages of illegal immigrants go up. So if you’re lucky enough to get in, the reward is higher. That’s one unintended consequence.

I’ve heard you speak before about cyclical migration patterns and how, by making it so difficult to get in, people who once came alone now bring families. And families are what create the negative economic impact, because they use up education and health care dollars.

It reduces the circularity [of migration patterns] so people stay here longer. And they are also more likely to try to reunify with their families by bringing them here. So you actually have this unintended consequence of initially increasing the permanent population of illegal immigrants when you implement tough border enforcement. Whereas people before were more likely to leave their families in, say, Mexico and just migrate for work and then migrate home.

Last week, the Senate killed John Cornyn’s amendment to the immigration reform bill, which would have required raising the current 45 percent apprehension rate to 90 percent. What do you think a 90 percent rate would do?

If you put a border patrol agent every other meter on the border with Mexico, yes, you will not have any illegal immigration because they will be standing there in the way. But the question that’s not being asked is: At what price? At what cost to the taxpayers? And what else could you do with that money?

Then what do we do about illegal immigration?

Interior enforcement. Interior enforcement policies are, in so many ways, superior. They’re not nearly as expensive and are more efficient. If you have sensible interior enforcement policy, like universal E-Verify, then you’re really going to reduce the pressure on the border and save resources.

What’s the impact of illegal immigration on U.S. workers?

For native workers who compete closely with low-skilled immigrants, there is an adverse wage effect. But it’s quite small, smaller than you would think. And you don’t really find any adverse effects with high-skilled immigrants. Other forces drive wages to a much greater extent. Labor economists generally agree the most detrimental force on low-skilled wages, especially blue-collar men, is technology. And globalization — the offshoring of jobs that were traditionally high-paying. There are other things like the decline of unionization and in the real value of the minimum wage.

There have also been changes in the U.S.-born workforce — the aging that people talk a lot about and the increased education levels. The supply of U.S.-born workers who have less than a high school degree has been falling over time and is continuing to fall. These workers coming from Mexico and other countries are filling a niche.

Demographer Steve Murdoch has often said that, because of the graying of the U.S. workforce, we need a significant in-flow of immigration.

Does the economy need immigration? Do we need faster economic growth, do we need a more efficient, productive economy? Do we need it, or do we want it? That’s the distinction. If we want the economy to grow at potential, if we want to continue to rely on the services we’re accustomed to at a cost we’re accustomed to, if we want to continue living the way we have been living, yes, we need these workers. It’s just that the word need is tricky in this context.

A lot of the back story to what’s happening in Washington today has to do with what happened with the Immigration Reform and Control Act of 1986. There’s a feeling that we gave illegal immigrants a path to citizenship and now we have three or four times as many.

What happened with IRCA is that we legalized 2.7 million undocumented immigrants and then, 25 years later, we have 11 million more. But there are several reasons why what happened under IRCA is not going to happen again. First, look at the supply. Look at where people were coming from. They were overwhelmingly coming from Mexico. Well, that supply push has gone away. Mexican fertility has fallen from six to eight children per woman down to two to 21/2 per woman. (Don’t ask me how you can have half a child.)

Yeah, the poor mother. Actually, the figure you cited in your report is 2.2.

OK, 2.2. So you don’t have that demographic pressure coming from Mexico.

Another reason is technology. In the ’80s and ’90s, it was so hard to enforce the border because we didn’t have the technology to process these people. We couldn’t take their fingerprints and keep them in a database. It was a revolving door. Nowadays, we know exactly who they are, who’s getting caught two, three, four times. And we can implement interior enforcement as well. And pretty cheaply, like an E-Verify program. That was not possible 20 years ago. With technology, we will never go back to where we were before, where a half a million or a million undocumented immigrants were coming in, on net, in a given year. We’ll never go back to that.

This Q&A was conducted and condensed by editorial writer Ralph De La Cruz. His email address is rdelacruz@dallasnews.com. Pia Orrenius’ email address is pia.orrenius@dal.frb.org.

More: 

Federal Reserve Bank of Dallas, Pearl Street (...

Federal Reserve Bank of Dallas, Pearl Street (Uptown), Dallas, Texas; Wikipedia image. The Dallas FRB has a wonderful collection of regional art — all unfortunately out of public view.


Dallas Fed sessions for teachers June 30 and July 1

June 11, 2008

Federal Reserve Branch banks take seriously the Fed’s pledge to education Americans, and to support educators in understanding economics and the work of the Federal Reserve Banking System.

The educator support team at the Dallas Fed recently secured approval to provide continuing education credits for a two-day session on globalization planned for San Antonio, on June 30 and July 1. These sessions are easy, generally loaded with details, and tailored for educations. Plus they are usually well catered.

$35.00 gets all materials, two lunches, one continental breakfast, and 12 hours of credit.

All details from the Fed’s press release, below the fold.

Read the rest of this entry »


December 23, 1913: The Federal Reserve

December 23, 2007

Now, here’s an anniversary you won’t find many people celebrating — and that’s really a shame. The U.S. Federal Reserve System is a great idea, copied by most other free market nations, at least in part.

You almost get the idea Americans either don’t understand the Federal Reserve, or actually oppose it.

The Federal Reserve System

Federal Reserve Building
Federal Reserve Building, Washington, D.C.
Theodor Horydczak, photographer, circa 1920-1950.
Washington as It Was, 1923-1959

On December 23, 1913, President Woodrow Wilson signed the Owen-Glass Act, creating the Federal Reserve System.

Text from the Library of Congress’s “Today in History” site.

The Federal Reserve followed the Panic of 1908. Legislators hoped the Federal Reserve Board would be able to prevent future recessions. Clearly, considering the Stock Market Crash of 1929, and the Great Depression, it didn’t work as well as hoped.

Modifications in 1933 gave it even more power. The Federal Reserve today is regarded as a model for how a government’s central bank should be operated by many economists and most other nations.

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“Evening at the Fed” Dallas registration deadline Nov. 22

November 21, 2007

Dallas-area economics, government and history teachers need to watch the deadline to register for the Dallas Federal Reserve Bank’s “Evening at the Fed,” scheduled for November 29, 2007.

Deadline to register is November 22.

Good dinner, continuing education credits (professional development), a few good ideas for your classroom. See my previous post, here.


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