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What happens when an Austrian School economist interviews for a job at the Federal Reserve?

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September 10, 2009 – Comments (11)

Apparently it happened, though I want some verification before I take this as anything more than a very funny joke.  Either way, I got a good chuckle out of this:

i should tell the story about my job interview with the fed here in kansas city. they asked me about optimal monetary policy, and hilarity quickly ensued.

so they started off asking basic technocratic economic questions..."what should the fed do when inflation is increasing?", "why do bond prices and their yields move in opposite directions?", "what happens when the fed increases the reserve requirement?", etc.  i prefaced every answer with the words "the textbook says..."  so when inflation is increasing, i said "the textbook says you raise rates."  they noticed, and at the end of the interview they asked why i prefaced every answer with "the textbook says..."  i said, "because i don't always agree with the textbook, particularly when it comes to the actions of the federal reserve."  i then turned the tables and put them on the defensive.  a nutshell:

me: what are your feelings on price and wage controls?

them: we're against them.

me: do you disagree that interest rates are prices, that they communicate information about the real state of the economy, the capital structure, and producer/consumer sentiments?

them: it's more complicated than that...

me: if you don't have another interview scheduled after mine, i don't mind waiting and listening to your explanation.  how exactly can the fed manipulate interest rates and not expect consequences not unlike those that result from controlling other prices and wages (ie...minimum wage, rent control, etc)?

them: the nature of money is very different than is the nature of other goods and services.  blah, blah, blah...

me: fair enough, but that doesn't distract from the fact that distorting the price of money, as communicated by interest rates, has effects on the real economy.  if it didn't there would be no need for the fed in the first place.  if the fed's actions had no real effect, it would be a redundant institution, no?

them: .............................

me: i'll show myself out.  thanks.

 

 

11 Comments – Post Your Own

#1) On September 10, 2009 at 4:33 PM, catoismymotor (36.11) wrote:

Nice. It would be cool if this is a true accounting of such an occurance. But my whiskers are twitching like they do when I hear stories about the fish that got away.

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#2) On September 10, 2009 at 5:51 PM, TMFCrocoStimpy (95.14) wrote:

Six Months Later............

them (Fed Interviewer):  Hey, weren't you telling me something about interest rates a while ago?

me:.......erm, you want Fries with that?

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#3) On September 10, 2009 at 5:59 PM, oldfashionedway (35.72) wrote:

An Austrian economist, a Keynesian economist, and a Neoclassical economist all walk into a bar...

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#4) On September 10, 2009 at 9:04 PM, dbjella (< 20) wrote:

David -

I know you know it will never happen.  I don't either, but what do you think the audit of the Fed will give us the american people? 

 

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#5) On September 10, 2009 at 10:09 PM, whereaminow (46.24) wrote:

TMFCrocoStimpy,

Ha! You sound like the pony-tailed Harvard kid in Good Will Hunting.  

dbjella,

We should find out two things.  First, we'll discover (almost) exactly how much money has been created by the Fed. Second, and much more importantly, we'll find out who received the money.  How much went to foreign bankers? Politicians? Lobbyists? Cronies and scum?

Then the circus will follow.  The Fed and its army of intellectual cheerleaders will attempt to explain it all away.  On the one hand, they'll admit that the Fed may have overstepped its bounds and acted improperly in certain areas.  On the other hand, they'll assure the people that all we need is tighter oversight.  But abolishing the Fed is foolish.  That will be fun.

David in Qatar 

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#6) On September 10, 2009 at 10:34 PM, AvianFlu (35.24) wrote:

clever interview!
My little brother worked for the New York Fed before becoming the chairman of the economics department at Oberlin college.
If you interviewed with him I think you would be met with a combination of condescension and ridicule. Little brother is a total socialist. His wife even lived in communist Russia and thought it was a great system. I have a hard time talking to him about economics or politics. How can so-called educated people be so naive?

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#7) On September 10, 2009 at 10:48 PM, whereaminow (46.24) wrote:

AvianFlu,

A socialist working for the Fed?  Why, the Republicans tell me that the Fed is a necessary capitalist institution, and anyone who thinks otherwise is a nutjob.  Well, I think someone needs to tell John McCain, RedState.com, and Huckabee's Army that the Red Menace is helping to decide monetary policy :)

David in Qatar

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#8) On September 11, 2009 at 4:20 AM, PdoBear (< 20) wrote:

When an Austrian interviews for any job in government, they just hand him some tin foil (for hat making purposes) and turn his name over to the FBI.

Let's be real about this. The Jim Rogers of the world may crush the Keynesians in market predictions but the Keynesians control, and will always control, the mechanisms of power. 

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#9) On September 11, 2009 at 4:38 AM, jester112358 (29.01) wrote:

And if I may add one other thing we will find out in a good Fed audit.  The collateral put up by the counterparties (banks, insurance companies etc) who got all that US taxpayer backed dollars and its value on the FEDs balance sheet.  That may be the most interesting revelation of all and that which makes the FED fight so hard against an audit.  (Methinks they doth protest too much)  My guess is the collateral for those "loans" may be a hot steaming piie of turds such as CDOs backed by overvalued CRE and MBSs (with the emphasis on BS).

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#10) On September 11, 2009 at 9:40 AM, dwot (97.28) wrote:

Thanks for the laugh.

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#11) On September 11, 2009 at 3:39 PM, guiron (< 20) wrote:

Well, I think someone needs to tell John McCain, RedState.com, and Huckabee's Army that the Red Menace is helping to decide monetary policy :)

The Red Menace? What, is this 1953?

Hey, did you know that my brother's friend is a Martian, and he works for the Treasury Dept! Not only that, but the Martian's wife is a full fledged member of the Whig Party! Imagine that! And you know it's true, because I'm telling you this on the Internet!

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