It seems that the Federal Reserve Board remains in its maybe yes, maybe no mode concerning an interest rate hike. Which is no surprise, of course, given that they are on record as wanting to incrementally raise interest rates, but without throwing the economy back into recession.
Whatever the Fed decides to do and whenever it decides to do it, we are well past the time to end the Fed’s lack of transparency about what it is doing, why it is doing it and what it expects to happen to the economy and the public when it does it. Once upon a time, Alan Greenspan became famous for giving Congress, and through it the public, impenetrable and obscure statements about what the Fed was up to. In those days it seemed sort of cute and entertaining that all of us, including the Congress were essentially left in the dark about what the Fed thought was going on in the economy and what it wanted to do about it. It made Greenspan look like he had some secret wisdom about the economy that we were too dumb to get. As it turned out, in 2007 we learned that Greenspan knew less than he or we thought he did, much to the detriment of country.
The Fed has certainly become more forthcoming since the dark, in all senses of the word, days of Greenspan. Nonetheless, the Fed is a part of the federal government, and it exists to serve the people of this country, who deserve to know what it is up to and how that will impact them. Members of the Fed and its regional boards spend a lot of time talking to big bankers, including those from which some members of the various levels of the Fed have come and to which many of them plan to return, and economists with various points of view. As a result, those insiders have a fair idea of what the Fed is really thinking, and the bankers certainly know what self-serving actions they are proposing. The people who are left out of this discussion are the citizens of the country who created the Fed and are affected by its decisions.
So in advance of its next interest action, the Fed should adopt a policy that at the time of any interest rate increase or decrease it will explain in plain language to the public what the interest action is intended to accomplish in both the short and longer term, which businesses and people will be helped by the interest rate action and which will be hurt by it. For example, the banks have been pushing for an interest rate increase by the Fed for a long time because doing so will make more money for them and, hence, their executive officers, by making consumers pay the banks more in interest. There is every reason for the Fed to explain to the public, among other things, that this will be an effect of any interest rate increase and to quantify that information.
The bank and other financial institution insiders won’t like having the public understand what the effects of various Fed actions will be, but that is no reason for the Fed, as a servant of the public, not to tell us.