There is an excellent way to cut through the misleading commentary about the Fed. You will learn a number of useful facts, and feel less nervous about what Fed Governors say. Not only that, it is an enjoyable way to spend a couple of hours.
Read Laurence Meyers book, A Term at the Fed. You can take it to the beach or read it on the plane. As I was reading it, my wife kept asking me what was so funny, so I guess it also has some humor. At least some of the prof-style laughs….
Here are a few of the things you will learn:
- The importance of staff. These are not a bunch of research assistants. They are talented and able economists who have a significant impact on thinking and policy of the governors.
- How consensus is achieved. It does not all happen at the meetings.
- The Fed has twin goals. It is not just about price stability. The economy matters.
- Inflation targeting has opposition, including Donald Kohn, who had several important staff roles before his appointment as a Governor.
There is also a lot of color about speeches by Governors – -what they say and the possible limits on them. This is good to know. There is independence of thought and action, but also a sense of responsibility.
This is a good read. It is a book that will make you a better investor in the current trading environment of "All Fed, All the Time."