A tongue in check look at the Fed setting Monetary Policy: Got Reliable “Data” Anyone?

By Paul A. Brooks
PMB Ventures Founder

The Fed inability to respond, in a timely manner, to prevailing economic conditions is costing us dearly. This begs the question, why the lackluster management performance by Mr. Bernanke and the governing board. Is it a lack of timely reliable data, the conflicting concerns about Inflation vs. Recession or just incompetence on their part to grasp the severity of the economic conditions that plague the economy?

To answer this question, one has to step into their shoes, adorn their academic hats and ponder the issue. This said it appears the Fed approaches the process as an academic exercise. Given this observation, the critical element in the decision making process is empirical data. Without this most academians would be hesitant to make a decision much less commit themselves to a course of action; here in lies the dilemma.

Setting sound economic policy is dependent on the quality, accuracy, reliability, and timeliness (lags the economy) of the data used in the process. In addition, critical to the Data are the assumptions and estimates used in its derivation. This being the case, errors maybe introduced into the process prior to actual policy being made.

Managing the economy is akin to preserving our Democratic freedom from hostile foreign entities. With this in mind, we need to ensure that the weaponry use in fighting the economic insurgence, that threatens our way of life, is reliable and timely. No not Al-Qaeda, but Data; making decisions or lack there of and setting policy based on inaccurate information is a problem that has to be acknowledged and rectify. There is no reason why the information needed to monitor the pulse of the nation’s economy cannot be gathered and made available in real-time.

If automating Corporate Balance Sheets, in real-time, have been a priority for Financial and Corporate institutions then the same should hold true for the stewards responsible for the economic governance of our economy. Though this is a daunting task we do have the intellectual, technological and financial resources to make this a reality. Or minimally a debate surrounding the benefits or lack of, should be an issue on the minds that govern us.

To follow: How is this possible