Meddling Mandarins of the FOMC
Meddling Mandarins of the FOMC
Like French in Feudal Europe and Latin in the Catholic Church, Mandarin Chinese was a language spoken by a privileged class.
Mandarins as a class can be traced back to 206 B.C. when a system of civil service examinations was established to select officials based on their knowledge of Confucian classics and other literature.
Over the centuries, these educated elites became responsible for maintaining social order, collecting taxes, and overseeing public works projects.
Mandarins were technocracy in action.
Today, we have our own privileged class of technocrats with their own special language.
They call themselves the Federal Open Market Committee, or FOMC, and their special language will undergo detailed scrutiny beginning 2pm ET next Wednesday.
These modern-day Money Mandarins presume the knowledge to manipulate the price of money.
But, as I spare no ink reminding you every chance I get, the members of the FOMC simply don’t possess the knowledge necessary to undertake such a monumental task.
No one does.
Indeed, like Friedrich Hayek, one of the greatest free-market economists of the 20th century said, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
An imagination that Hayek went so far to label as “fatal conceit.”
Unfortunately, this conceit isn’t limited to the Federal Reserve.
Aspirations of Order
Fatal conceit underpins the arrogance common to nearly all who would dare pass laws, effect policy, or pass executive orders that impact the decisions of hundreds of millions of people.
Their common error: Imagining centralized decision-making outperforms decentralized decision-making.
In short, they like to meddle.
These malicious meddling mandarins think that the order imposed by the decisions of a few can bring a more optimal result than the one that emerges naturally out of chaotic human interactions in a world rich with choice.
And they basically get the run of the place because, deep down, most people crave more order than nature allows.
Elected officials and the technocrats they assign simply reflect that desire.
The masses want their mandarins, and politicians give the masses what they want.
Sadly, the rampant, deep-seeded tendency of most people to look to those apparently in control to make things better, especially in times of trouble, creates more problems without ever solving the one it set out to resolve in the first place.
We hope that bailouts work. We believe the Fed can orchestrate the “right” price of money. We buy into superficial dialectics like “Russia bad, NATO good” because it makes us feel the system, built by mandarins to benefit mandarins, works.
Austrian economists have tried for over a century to teach us that decentralized decision-making outperforms centralized decision-making.
Any system dependent on the intervention of a few to create order out of chaos is doomed to failure.
And until the voting masses take that lesson to heart, we’ll keep hanging on to every meddlesome word that ushers forth from the money mandarins mouths.
Think Free. Be Free.
