Thursday, December 25, 2008

Bernanke / Geithner talk out both sides of their mouths

In two recent posts, I've been wondering:

Is The Fed part of the US Government or a private business?


Why are Bernanke / Paulson / Geithner opposed to transparency?

I know that administration officials often think more highly of themselves than is deserved, so their doubletalk comes as no surprise. But they still need to be held accountable. So I'm trying to decipher if The Fed actually believes itself to be part of the government or a private business?

Using the always useful, but imperfect Wikipedia - here are some thoughts:

1) I searched "Government in the Sunshine" (a.k.a Freedom of Information) and found: Freedom of information legislation, also described as open records or (especially in the United States) sunshine laws, are laws which set rules on access to information or records held by government bodies.

2) The Fed's own website acknowledges that the Government in the Sunshine act applies to them:

3) But further down on that same webpage, you find this "trade secrets exemption" clause:

4) I had been wondering about this "trade secrets" clause since Bernanke used it on December 8 to defend his opposition to transparency and love of counterfeiting printing money in smoke-filled rooms behind closed doors. I first saw this "trade secrets" nonsense begin playing itself out when Bloomberg's Mark Pittman reported that the Fed claimed: it’s allowed to withhold internal memos as well as information about trade secrets and commercial information.

5) The next logical question is to define "trade secret," so I visited Wikipedia and found: A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers.

6) So while The Fed says that Government FOI laws apply to them, they also claim the business-related "trade secrets" clause applies to them.

7) Taking it one step further, I used Wikipedia to define a "business:" A business (also called a firm or an enterprise) is a legally recognized organization designed to provide goods and/or services to consumers, governments or other businesses.

Based on both:

a) my cursory investigation using Wikipedia, and

b) common sense / conventional wisdom

I conclude that a government and a business are two distinct entities that cannot be one and the same. Furthermore, I conclude that Bush's Bernanke and Obama's Geithner are trying to have it both ways - they oppose transparency because they benefit from talking out both sides of their mouths.

But is this any surprise? We all know that they've turned on the printing press and had printed more than $7 trillion as of a month ago.

Monetary policy matters. I hope President-elect Obama realizes this before the dollar is irreversibly damaged.

Tim White

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