From Federal Reserve Chair Janet Yellen, in remarks for a speech in New York on Tuesday night:
The risk of regulatory capture is something the Federal Reserve takes very seriously and works very hard to prevent. It is important that anyone serving the Fed feel safe speaking up when they have concerns about bias toward industry, and that those concerns be addressed.
She evidently said this with a straight face. It would be a laughing matter, except the Federal Reserve is supposedly charged with fixing interest rates, keeping America employed, promoting just the right amount of inflation, and elevating stock, real estate, and other asset prices ad infinitum. There is no risk of “regulatory capture” with the Fed because it was designed by bankers for bankers way back in 1913 and has been captured ever since (see The Golden Pinnacle for a fictional treatment of this episode in American history). Come the next crisis, the Fed and the rest of the government will again hop to it and bail out the biggest banks, just as they did in 2008. Although Yellen is a sock puppet, she deserves a small (very small) measure of sympathy. The current Rube Goldbergian contraption known formally as the financial system, informally as “A Skyscraper of Cards,” (SLL, 10/19/14) will probably collapse on her watch, and she will get a disproportionate share of the blame, because everyone “knows” the Fed can control the economy and financial markets at all times. She will deserve some of the blame, but not the virulent attacks that will be directed against her. That skyscraper of cards has been in the making for many decades, through the tenure of several chairs of the Fed.
